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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
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Experience:  English solicitor with over 12 years experience
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I have loaned money to family members (siblings and great nephew)

Resolved Question:

I have loaned money to family members (siblings and great nephew) in the past. Can I write these off in my Will and avoid inheritance tax. These loans exceed the £3000 annual allowance.
Submitted: 2 years ago.
Category: Law
Expert:  UKSolicitorJA replied 2 years ago.
Hello,

How long ago did you lend the money and how much was it?
Customer: replied 2 years ago.

To my brother I loaned £10,000 about 10 years ago and have not demanded any repayment nor will I.

To my great nephew I loaned £4500 2 years ago. They wish to repay but I do not wish him to.

Perhaps these might be regarded as Gifts in my Estate ? I hope not.

I am single and find very few exemptions in Inheritance Tax Law for single people.

Expert:  UKSolicitorJA replied 2 years ago.
Thank you.

Your brother's loan is exempt as you have lived for 7 years since it was made, so you do not need to worry about that. (this is known as as the Potentially Exempt Transfer rule)

Your great nephew's gift is also exempt as you are allowed to give away 3000 pounds every year and you can carry forward the previous year's unused allowance, so in the year you gave him the 4500, you had an allowance of 6000 to gift away.( Annual exemption rule).

These gifts will not form part of your IHT allowance.

All the best
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience: English solicitor with over 12 years experience
UKSolicitorJA and other Law Specialists are ready to help you
Customer: replied 2 years ago.

Thank you for that. Every time I read the regulations PET seem to be allowed to husbands, wives, children and grandchildren and not to siblings and nieces nephews.

Expert:  UKSolicitorJA replied 2 years ago.
There are no such restrictions on PETS, you can gift to any individual, does not need to be husbands etc, see here:

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#4

All the best

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