The news focuses on the political fallout. A £5 million gift to a public figure, a by-election, a parliamentary probe. I see a different story. I see the family of the person who gave the money. I have sat in rooms where gifts of this size have detonated, leaving confusion and resentment for a generation. The sums are not abstract. When a gift is made, especially from a source described as a 'crypto billionaire', the stakes for the family are incredibly high. It is our job to look past the headlines to the structures underneath. Often, there are none.
The Seven-Year Clock A gift of this size is what we call a Potentially Exempt Transfer, or PET. It is ‘potentially’ exempt from Inheritance Tax. The key word is potential. For that £5 million to be fully tax-free, the person who made the gift must survive for seven years. If they die within that period, the gift falls back into their estate for tax calculation. The tax liability, which at 40% could be as high as £2 million, falls not to the estate, but to the recipient. In this case, the politician. Suddenly a £5 million gift becomes a £3 million gift with a £2 million bill attached. This is a shock we see too often.
Certainty in Writing Beyond the tax, there is the human element. Was the gift properly documented? Did the donor declare their intention in a formal letter, alongside their will? Did they take independent advice to demonstrate they were of sound mind and not under duress? Without this, a family could challenge the gift after the donor's death. They could argue the donor lacked capacity, or that there was undue influence. The investigation by Parliament into this gift hints at these questions of propriety. For any family, a clear paper trail is not about mistrust. It is about providing certainty and protecting everyone involved, including the recipient.
Large transfers of wealth are not just for billionaires and politicians. They are part of planning for many UK families. Getting the structure right is everything. It ensures your wishes are met and protects the people you care about from conflict and unexpected liabilities. These are difficult subjects. We are here to help you address them.
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Written by Sean Kiani, Estate Planner at Inheritance Made Simple. Sean writes and reviews the firm's guidance on estate planning, wills, trusts and inheritance tax, and works with families across Bournemouth, Poole, Dorset and Central London. Verify Sean's Society of Will Writers membership listing.