That's only to companys and trusts though, and very rare

http://www.hmrc.gov.uk/CTO/customerguide/page6.htm

No, thats not quite right...

They take IHT in advance if you make transfers, you then get that against any total IHT payable upon death but if there is no IHT payable you dont get a refund... but you are right, it is IHT free provided they dont die within 7 years of making the gift... but you cant be certain of that and theres a lot of risk in transferring £80k thats p;otentially subject to IHT IMO

IHT is THE most confusing and complicated tax and its also a vicious unfair tax that can tax you twice and not refund you as well... it should be made illegal

IHT only kicks in when you die....
they won't get any iht on money given

If they die within 7 years of giving the IHT, then the beneficiary will have to pay IHT

Plus as already said there is an allowance of £275k as well, which includes lifetime gifts

Yeah I know they would lose interest so would sort them out with some extra cash....it was the principle I wanted to check out first off.

My fixed rate mortgage doesn't run out for another 18 months so plenty of time yet....

Don't forget - they are probably earning 5-6% on it. They would lose that if it was sitting in your account but yeah, it would be a cheap mortgage for you.

its just offsetting savings not paying off the mortgage

quote:

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Originally posted by Kerry
I dont get why you are going down IHT route :boggle:

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The £3k is IHT mate... no CGT on cash

You'll have to careful borrowing/acquiring that sort of money as well; wether deemd to be a private loan or not you could end up getting stung for Capital Gains - I think the limit of a personal gift/loan is £3000 per 12 months. I may have the figures wrong, but at £80k there must be Capital Taxes to pay/avoid.

I dont get why you are going down IHT route :boggle:

If you offset savings against the mortgage you dont get asked where the funds come from!

quote:

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Originally posted by BigSte
As I understand it, an offset Mortgage looks at the balance left on your mortgage less the amount you have in your current and savings accounts and then charges you interest on the difference....
i.e If I owed £100k and I had £10k in savings I would only pay interest on £90k??

I suppose my first question is, is this correct?

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Yeah but it kicks in in advance if you transfer money regardless of real limit

They wouldn’t be able to give the money permanently as it would effectively be a loan…..they buy houses to do up and sell but they take about a year between selling a house and buying a new one so I wouldn’t be able to borrow it continuously but could save me loads of interest while they are buying a new house.

Alternatively, my nan is minted (all her money is split between my dad and my aunt so no option for her to pay off my mortgage lol), so she could lend me £80k till she passes away

I thought the limit on IHT was about £275k these days?

You would probably pay a notional amoutn fo interest but Im afraid your wifes parents cant just give you £80k... they'd get hit IHT... now, they could effectively take the mortgage out in their name and therefore do it that way

Russ - offset is just an interest calc, a shrinker clears out your accounts

Russ' suggestion is probs best suggestion but probably completely unfeasible

i thought it clears your current account every month. wouldnt your missus parents give you the 80k to pay your mortgage off and you could pay them off at like 330 quid over 20 years or 660 over 1 years?

i may be speaking bollocks in the first bit, and the second bit depends on how much her parents like you both lol

This might be the most ridiculous question but sounds logical to me....

As I understand it, an offset Mortgage looks at the balance left on your mortgage less the amount you have in your current and savings accounts and then charges you interest on the difference....
i.e If I owed £100k and I had £10k in savings I would only pay interest on £90k??

I suppose my first question is, is this correct?

My second is, I owe about £80k - my wifes parents have about £100k in their bank - could I not borrow £80k from them and put this in my savings account......that way based on my assumption above, I would effectively pay no interest??

This sounds like a daft idea but could potentially save thousands on mortgage as you would be paying back 100% capital every month instead of a large amount of interest and a small portion of capital??