Inheritance Tax on Gifts

[BurntCelery]

Hello. Hopefully a simple question! My Dad's original will stated that his estate passes to my Mum on his death. Some years later, my Mum went into residential care for dementia. My Dad then changed his will such that his estate passes to me on his death. My question is this. In the scenario that my Dad provides gifts to me over the £325K limit and passes within 7 years of giving those gifts, am I liable for inheritance tax on his passing, regardless of whether his estate passes to my Mum (as per the original will) or me (as per the current will)? Thank you

[Pezza54]

What you have asked is not straight forward.
Lifetime gifts over a persons annual allowance are added to their estate when they die on a sliding scale up to 7 years before their date of death.

Assuming your mother passes before your father and their property is owned as joint tenants.
Your father becomes the sole owner of the property when your mother passes.
When your father passes, his estate should have £325k IHT nil rate band, plus £175K residence nil rate band making a total of £500k nrb
Provided your mother did not use up any of her nrb and lived at the property in her lifetime as her main residence, she has a transferable total nrb of £500k
This means your father's estate would have a total nrb of £1m

Please note the above is based on current tax allowances and bands which may change in the future

[BurntCelery]

Thank you PEZZA45 - all makes perfect sense. However, my question is specifically when my father passes away and my mum succeeds him. Regardless of whether his estate passes to me (current will) or my mum (previous will), would I still be liable for inheritance tax at the point my dad passes in either case if my dad has gifted me above his inheritance tax allowance when he passes? Or is it treated differently based on whether his estate passes to me (current will) or to my mum (previous will). Hope that makes a bit more sense. Thank you.

[Pezza54]

If your father passes before your mother and your mother is still in residential care, the LA will not be happy that your father appears to be avoiding care home fees by leaving his estate to you and not your mother. The LA may challenge the will