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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15835
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My father (UK passport holder living here last 40+ years) is

Customer Question

My father (UK passport holder living here last 40+ years) is due to inherit some money from a brother in India - can he pass this directly to his sons in UK without them being subject to inheritance or gift tax?
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.

Hi.

Leave this with me while I draft my answer.

Expert:  Tony Tax replied 1 year ago.

Hi.

There is no such thing as a "gift tax" in the UK. We have Inheritance Tax which is paid on the death of the donor on the value of their estate.

If your father is UK domiciled, when he dies his worldwide estate plus the value of gifts made in the seven years before death will be charged to Inheritance Tax. The nil-rate band will be first used against gifts made in the seven years before death in chronological order.

If your father is not UK domiciled, when he dies only his UK based estate which will exclude foreign currency denominated accounts in UK banks plus the value of gifts made in the seven years before death will be charged to Inheritance Tax. The nil-rate band will be first used against gifts made in the seven years before death in chronological order.

If your uncle in India is not UK domiciled, then it will probably be better for him to make the gift directly to you instead of to your father because that will escape any possibility of UK IHT altogether should he (your uncle) die within seven years so long as the gift is not made from UK based assets, eg UK currency bank accounts.

Take a look at section 5 of RDR1 here for information on domicile.

I hope this helps but let me know if you have any further questions.