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Can wife make sole gift from joint account?

Tax | Inheritance Tax Helpful? 4

Asked by Rekrap, submitted 01 September 2012.

Open Quote My wife recently wrote a six figure cheque for our son to help him with his business. This is a gift which we see as a potentially exempt transfer incurring no Inheritance Tax on her estate after 7 years. The cheque was written against a joint current account with myself. My health is poor my wife's health is excellent.

Is there any risk that on my demise within 7 years the Revenue would regard half of these monies as being chargeable to Inheritance Tax on my estate?
End Quote

Answered by Justin on 04 September 2012

Provided the money is a gift 'without reservation', i.e. your wife will not ask for interest or the money to be returned, then yes it should be a potentially exempt transfer.

The fact the money was drawn from a joint account shouldn't be a problem provided your wife documents that the gift was solely from her. I suggest she writes a note to this effect and stores it with your Wills (as well as giving your son a copy). Perhaps even send a copy to her tax office for good measure.

One point to bear in mind with potentially exempt transfers is that they're offset against the IHT nil rate band on death before the rest of the estate. So unless the amounts exceed the nil rate band it's unlikely the donor's estate would benefit from the taper relief on potentially exempt transfers should they pass away within seven years of making the gift.

You can read more about this on our inheritance tax page..

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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