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IHT and joint accounts
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Grey545
Posted: 20 January 2025 17:05:47(UTC)
#1

Joined: 20/01/2025(UTC)
Posts: 1
I know that subject to keeping proper records you can make gifts from excess income that are then not subject to IHT from the date of gift (ie. 7 year rule doesn't apply) so long as you keep a record.

If rather than gifting the money you transfer it to a joint account (ie. the donor and other family members) I presume that it then falls outside the estate entirely as it's in a joint account? Does the same rule about record keeping apply? Are there circumstances where money in a joint account does remain in the estate rather than passing outside it? (If not, why doesn't everyone simply set up a joint account with their children as they approach end of life and transfer their cash assets in there?)
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Milo Don
Posted: 19 February 2025 10:38:56(UTC)
#2

Joined: 18/05/2016(UTC)
Posts: 97
I imagine HMRC would consider that a 'gift with the reservation of benefit'.
They would probably also take a dim view of it if you removed yourself from the family joint account on your deathbed! They really are keen to get their claws into your hard-earned.
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Julianw
Posted: 19 February 2025 11:09:57(UTC)
#3

Joined: 28/07/2016(UTC)
Posts: 405
Quick googling came up with:
It is important to be aware, however, that for inheritance tax (“IHT“) purposes, HM Revenue and Customs (“HMRC“) treat each joint account holder as beneficially entitled to the proportion of the account which is attributable to their contributions. It follows, therefore, that if the deceased provided 100% of the funds to the account, then 100% of the balance in the account at the date of death would be treated as part of the deceased’s estate for IHT purposes.
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John Gilmore
Posted: 02 March 2025 23:35:26(UTC)
#5

Joined: 12/12/2020(UTC)
Posts: 17
How about the alternate approach here? Namely for the donor (in this case my mother) to gift to say for example to her two sons out of surplus income into a joint account held in the 2 sons names?n. I assume this is fine and the gifts would be fully exempt from IHT and the 7 year rule?

My mother seems fixated about gifting concerns and is very reluctant to do it... she doesnt want to gift individually for some reason but might be open to gifting into a joint account that we both agree to leave and NOT touch/spend. She has a large estate well above the £1M nil rate band which is only increasing all the time. She is 83 and not spending enough to get it down.

My father passed away in 2023. The big impact is the un-used SIPP (£600k) which my mother inherited and hasnt been touched. HMRC will now be grabbing 40% of this in April 2027.
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Stephen B.
Posted: 03 March 2025 14:43:24(UTC)
#6

Joined: 26/09/2012(UTC)
Posts: 794
John Gilmore;336290 wrote:
My mother seems fixated about gifting concerns and is very reluctant to do it... she doesnt want to gift individually for some reason but might be open to gifting into a joint account that we both agree to leave and NOT touch/spend.


That could easily sound like tax evasion, i.e. pretending to give the money away but still keeping it under the donor's control. If the money is really yours why would you agree not to spend it? A gift is a gift, free for the recipient to do whatever they like with ...
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