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What is inheritance tax?

What minimum rate of interest can I charge that would turn a gift into a loan for inheritance tax purposes?

  • I wish to make a gift to my parents who have an estate that would be liable for inheritance tax when they die, Is it possible to make the gift a loan and therefore the gift would not be part of the estate for inheritance tax purposes? I assume there is a minimum rate of interest that would qualify it as a loan. Does anyone know what this is?

  • Answer:

    Yes. The Bank of England's base rate, currently 3%. You need some sort of written agreement that this is an interest only loan with capital repayment upon death. Your solicitor will be able to draft the agreement, probably for about £150.

Jon H at Yahoo! Answers Visit the source

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The best bet is to look online at some of the finance directories. This one has some extensive lists http://www.surf4finance.com

keegan

Realistically, the Bank of England rate. Anything lower and the interest difference could be regarded as a gift. It could be a fixed rate loan to make things easier. I don't know much about inheritance tax, but I'm dubious that it could be avoided by making a gift into a loan. See a good solicitor.

Henry Hedgehog

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