I have come across a situation which doesn’t sit quite right with me and wondered what forum members felt about it.
Shortly after I started dealing with an estate the children of the deceased let me know that there were some gifts made to them in recent years. These were described to me as a loan of £300,000 to daughter to complete the purchase of a property. This was in September 2017. In December 2017 £130,000 was repaid to the deceased and in May 2018 £130,000 was gifted to the son.
I have prepared the IHT400 and associated schedules. In the process of getting these approved i received the usual misunderstanding about Taper Relief (they thought it would reduce the value of the gift - deceased died October 2020). To support their point of view, the family have produced a declaration signed by the deceased stating that the original £300,000 was a gift, not a loan (one would presume for mortgage purposes) and that there was no intention of repayment.
I believe that this now means there are three separate gifts.
- 300k from mother to daughter
- 130k from daughter to mother
- 130k from mother to son
Therefore, the whole NRB is used up and extra IHT will be due on the £105,000.
My concern is that the actual loss to the estate from gifts 1 and 2 is £170k when taken into account together.
Should I be declaring the full £300k gift as declared, or the £170k loss to the estate?