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The UK has no Gifts Tax regime so the money comes to his children free of tax. Just thank your lucky stars you don't live in France where the tax starts at 70% over 5K Euros.
However, the gift creates a Potentially Exempt Transfer (PET) in his Inheritance Tax (IHT) affairs. PETs run off over seven years at a taper and in the event of his decease within this period are added back to his estate and exposed to IHT. PETs are the first to suffer IHT and if the deceased's estate is insufficient to meet the tax on the PET then the liability cascades down to the beneficiary for immediate payment. IHT does not, of course kick in until assets on death exceed 325K
In the worst case scenario, an early decease and the added back PET generating an IHT liability and the estate unable to pay then the tax could fall on the child.