HMRC clarifies reach of new IHT charge
CIOT welcomes clarification
Gifts by parents and grandparents to children under 18 will not be subject to
a new inheritance tax charge, HM Revenue
& Customs has finally confirmed.
Because of uncertainties introduced by last year’s trust tax changes, there
had been fears that gifts to children would be subject to a different tax regime
from similar gifts to adults, the Chartered
Institute of Taxation said in a statement.
According to the CIOT, HMRC have now confirmed that gifts to children will
not be taxed differently from gifts to adults. Provided the gift is outright and
not subject to any form of contingency or trust there is no tax payable if the
donor survives 7 years from the gift.
If the donor dies within 7 years there will still be a charge (as with
adults). There are no ongoing IHT charges, the CIOT explained.
Emma Chamberlain, chairman of CIOT’s capital taxes sub-committee, said: ‘HMRC
have given a clear response to the questions that have been raised and so those
who are happy to make outright gifts to children can do so without incurring any
additional IHT penalty.’
Further reading:
CIOT welcomes ‘late election’ on inheritance tax
CIOT looking to raise phone problems with HMRC