How Do I Gift Money Without Being Taxed?

by from money.co.uk, Last Updated: 17 November 2014

"It's my money and I can do what I like with it," right? Wrong. There are a set of rules governing the 'gifting' of money - how much you give, how often and to whom determines whether the gift will be liable for tax. Here is what you need to know.

Empty Parcel

Why are there tax implications to giving money away?

In a nutshell, to prevent people from avoiding inheritance tax by giving all their money away before they die. This doesn't mean you can't make a gift of money at all, but the tax system is designed to ensure that you are not able to give away large sums of money (either in one go, or through smaller, regular gifts) without paying tax.

What is inheritance tax?

Inheritance tax is paid on someone's estate (i.e. money they had in the bank, property they owned etc) when they die. Inheritance tax is only payable on any portion of that estate that is above a threshold of 325,000, and is charged at 40%.

Who pays inheritance tax?

In effect, the estate of the deceased pays the tax. In other words, inheritance tax is assessed and paid out of the whole estate, with the beneficiaries of any Will getting their share of the estate after tax.

So, are gifts of money always liable for inheritance tax?

No, there are a number of exceptions that enable gifts of money to be given, without tax being liable. Those exceptions break down according to who the money is given to, why it is given, the total amount you give away each year and how long you live after giving money away as a gift.  They break down as follows:

1. Gifts to 'exempt beneficiaries':

You can give as much money as you like to certain people and organisations without paying Inheritance Tax (this applies whether you give money whilst living or after you death, via your will). Exempt beneficiaries include:

  • Your husband, wife or civil partner, provided they live permanently in the UK
  • Charities registered in the UK - to check which charities qualify, visit the HMRC website 
  • Some national organisations like universities, museums and the National Trust

NOTE that gifts to unmarried partners or unregistered civil partners are not exempt from Inheritance Tax.

2. Your Annual Exemption:

You are allowed to give away a total of 3,000 each year, without any tax implications after your death.

Bear in mind that this is the total annual amount that you can give away, NOT a total amount you can give to each beneficiary, each year.

It is also worth noting that your Annual Exemption can be carried forward for one year if it has not been used. In other words, if you did not make any gifts of money during last year, you can give away a total of 6,000 this year. Equally, if you gave away 1,500 last year, you'll be able to give away a total of 4,500 this year.

The Annual Exemption cannot be carried forward by more than one year.

3. Giving small cash gifts:

In addition to the exemptions above, you can give away small gifts - not more than 250 - to as many people as you like in one tax year.

However, some points to remember include:

  • You can't make a gift of more than 250, and claim exemption on the first 250 - larger gifts are treated differently
  • You can't combine the small gifts exemption with another exemption when giving money to one person. In other words, you can't give one person 3,250 and claim exemption based on a combination of the small gifts and 'Annual' exemption

4. Wedding gifts:

Provided that you give or promise to give a cash gift on or shortly before the ceremony you can make quite large cash gifts as wedding or civil partnership presents, without being liable for Inheritance Tax. The limits on such gifts depend on your relationship with the recipient:

  • If you are a parent you can give up to 5,000 tax free
  • Grandparents can give up to 2,500
  • Anyone else can give up to 1,000

Remember however that, if the wedding or civil partnership is called off and you still give the gift, it will NOT be exempt from Inheritance Tax.

5. Regular gifts or payments:

Any gifts that are part of your normal expenditure, are exempt - provided they are made from your after tax income (not your savings) and that you have enough money left over to maintain your lifestyle. These exempt payments include:

  • Maintenance for your husband, wife, civil partner
  • Maintenance for your ex-husband, ex-wife or former civil partner
  • Maintenance for relatives who depend on you
  • Maintenance for your children, adopted children or step-children, as long as they are under 18 or in full-time education
  • Monthly or regular payments to anyone
  • Regular gifts for Christmas, birthdays or wedding/civil partnership anniversaries
  • Premiums on life insurance policies

Does it make any difference when I give money as a gift?

Yes, though this rule really only makes a practical difference for the elderly and people who are terminally or seriously ill. That is, any gift given more than seven years before your death is automatically exempt from Inheritance Tax. In addition, any gift given between three and seven years before your death will be liable for Inheritance Tax at a reduced rate - this is known as 'Taper Relief'.

How is inheritance tax paid on gifts given less than seven years before the death of the 'giver'?

This depends on the value of the gift, and there are two possible scenarios:

  • If the gift is worth less than the Inheritance Tax threshold (325,000), then the value of the gift will be added to the deceased's estate, with any tax paid by the estate prior to any inheritances being paid out
  • If the gift is worth more than the Inheritance Tax threshold, then the recipient (or a representative of the deceased's estate) will have to pay Inheritance Tax on the total value of the gift.

Remember that these rules only apply to gifts not covered by the exemptions already described above.

Do you have a question?

ask your question here

Responses

can both parents gift £3,000 to each child each year without paying tax ?

by ENID, 15 Sep 2009

my mum for the past two years and for the next has put money away for myself also for my husband please can you advise the maximum allowance we are allowed to recieve.thankyou v j mcgurl

by valMcGurl, 9 Jan 2011

can I lend my son £50,000 then write a letter to explain that I gift him £3000 a year and just reduce the loan so after year 1 he only owes me £47,000 year 2 £44,000 left etc?

by Anonymous, 12 Mar 2011

what a great idea

by arroyo28, 23 Apr 2014

that's a brilliant idea any ideas on how to word the letter please im in same situation but its myself that had the 50...

by anniesh48, 20 May 2014

Can par ants give £3000 to each child in family each year.

by brians, 11 Jun 2011

a friend gave me 30k to invest in the stock market because he didn't have a account ! that is now worth 265k how can i pay him back?

by adrian65, 19 Jan 2012

As the initial sum was not yours, the acrued investment returns are not yours either, regardless of who's account they have been sitting in. The whole 265K belongs to your friend. He will have to pay 40% capital gains tax on 235K of it though. There is an anual allowance for capital gains tax which can be back dated so it will perhaps not be as much - he should get a trained accountant to work it all out.

by TaxSlave, 11 Mar 2013

What are the tax implications if my father was to buy me a house/flat?

by chardonnay, 19 Jun 2012

Hi chardonnay,

If you post your question in our Q&A you're more likely to get the answer you need:http://qanda.money.co.uk/

by Hannah from money.co.uk, 19 Jun 2012

if you dont have 325,000 you dont have to pay inheritance tax so can u gift any amount i wish or am i reading this wrong

by edithf, 23 Jul 2012

Hi edithf,

That's right; I've just double checked with HMRC and as long as the total value of your estate including the amounts you gift remains under the IHT threshold (currently £325k) then you'd theoretically be able to gift an unlimited amount without repercussion from the tax man.

by Hannah from money.co.uk, 25 Jul 2012

What a country. It IS my money and no rules will dictate to me how much I give away.

by warbuc, 11 Aug 2012

Too right , mate .

by nadge, 6 Mar 2013

yes its a joke, if you had lots of money, off shore your money then the son or daughter go offshore and when your non-resident for tax purposes pay your son / daughter the full amount from the company.

by rkenn90, 4 Nov 2013

You work hard all your life building up a nest egg, only to be told you can"t do what you like with it.best put under the bed

by arroyo28, 23 Apr 2014

Can my husbands parents give him £140,000 to give to me to buy me out?

by bessie100, 14 Sep 2012

Hi bessie100,

Do you mean to buy you out of your shared property?

Irrespective of the reason for the gift his parents could give him the money, however if they passed within the next 7 years the money could be taken into consideration towards the value of their estate for inheritance tax purposes. If they outlived this period I believe it's the case that the money would become exempt.

by Hannah from money.co.uk, 29 Oct 2012

This answer contradicts the answer to a question that I posed. I asked whether, if I sold my home for £450,000 and gave each of my three adult children £50,000 and then bought a house for me for £300,000, any of us would have to pay any tax as long as I lived for another 7 years. The answer was that the pensions department might think I'm trying to avoid paying tax. Either the 7 year rules apply or it doesn't. (The person that answered me was 'Loopydo'.

by janero99, 2 Apr 2014

Hi there. If a relative was to give me £15,000 as a helping hand in life (eg, to buy a car, to pay some bills, or for education etc), would I have to pay tax on that?

by Marcino, 23 Oct 2012

Not upfront, no Marcino and proving the relative lived for longer than 7 years after giving you the gift you wouldn't need to pay inheritance tax on it either (if their estate was liable) as and when they do pass - sorry, it's a little morbid to talk that way but that's the situation.

by Hannah from money.co.uk, 29 Oct 2012

This answer contradicts the answer to a question that I posed. I asked whether, if I sold my home for £450,000 and gave each of my three adult children £50,000 and then bought a house for me for £300,000, any of us would have to pay any tax as long as I lived for another 7 years. The answer was that the pensions department might think I'm trying to avoid paying tax. Either the 7 year rule applies or it doesn't. (The person that answered me was 'Loopydo').

by janero99, 2 Apr 2014

If I was a lottery winner and wanted to give a friend 1 million pound am I right in thinking that they would only have to pay inheritance tax if I died within 7 years of the gift or would they need to pay 40% tax straight away.....just curious sadly I am yet to win the euros lol

by wato, 5 Nov 2012

Yes, I believe that's the case wato.

by Hannah from money.co.uk, 5 Nov 2012

Yes if I win the lottery mega millions ,I would give enough over the millions to pay the extra tax ...

by rosetta, 23 Nov 2013

Sorry Hannah - what is the case? Would inheritance tax be paid only if the donor died within 7 years of making the payment OR would the tax have to be paid immediately by the recipient...?

by janero99, 1 Apr 2014

Hi, I would like to transfer £46,000 to a parent in the UK (I am in the US). Can I do this without tax implications for myself or my parent (provided I survive 7 years after the transfer), or would it need to be broken up into smaller portions? Thanks

by Brian_Brooks, 13 Nov 2012

Hi Brian, I'm not entirely sure of the situation because you're a US resident and would therefore be subject to their estate tax rather than UK inheritance tax (assuming you're now resident in the USA). I don't believe there would be tax implications for your parent but I'm not certain what it means for you.

by Hannah from money.co.uk, 9 Jan 2013

Our assets of £300,000 are shared equally by me and my wife. If I die first, my estate will be £150,000. The survivir's estate will be £300,000. Can we give away £40,000 to our children now, without incurring any tax liability ?

by davidmh21, 8 Jan 2013

Hi davidmh21, I believe it's the case that because your total estate is below the £325,000 threshold for IHT your children wouldn't be liable unless your estate grew significantly prior to both your own and your wife's passing and that this happened within 7 years from when you gave the gift.

by Hannah from money.co.uk, 9 Jan 2013

Thank you, Hannah. A very useful service. Davidmh21

by davidmh21, 9 Jan 2013

I believe it is 325K fpr each estate if you are married so that would be 650K between the two if you are married so really doesn't seem like you need to worry about IHT.

by TaxSlave, 11 Mar 2013

My wife and I have joint assets of £450 000 (including the value of our house). So there will be no IHT to pay on the first death as our joint IHT allowance would be £650 000. If we gift £20 000 between our children this year, that means at least one of us must survive for more than 7 years for there to be no IHT liability for the cash gifted. Is that correct?

by Nunoo25, 28 Jan 2013

Hi Nunoo25
My understanding is that as your joint assets are below the joint threshold then there will be no IHT to pay. It does not matter how much you gift, or how long you live, IHT is only payable if your total assets are above the threshold.

by Bonz1957, 28 Jan 2013

Thank you, Bonz1957. Yes, I have since learned that the joint IHT allowance (i.e. 2 X £325 000) continues and covers the second death, rather than the surviving spouse only being left with only a single IHT allowance.

by Nunoo25, 28 Jan 2013

Yes that is true .

by nadge, 6 Mar 2013

Hi Nunoo25
My understanding is that as your joint assets are below the joint threshold then there will be no IHT to pay. It does not matter how much you gift, or how long you live, IHT is only payable if your total assets are above the threshold.

by Bonz1957, 28 Jan 2013

Our house is probably worth £250,000& same again in shares & cash , can i start giving my children money now? & ideally both of us live beyond the magic 7 years, of course if one partner should die , then the remaining partner will be over the allocated threshold , am i reading this correctly?. Also how do the powers be know that i was giveing money away some 5 years ago?, do they look at all past transactions at your banks, if i got pulled up now i would not remember what i did with the money in the past & im not on the fiddle.
Surely all this must be some voluntary admissions of what you have spent your money on.
One son i loaned £3.000 a few years ago & at the moment he his well on his way in paying me back, when it has been returned i am going to hand it back to him , i am just letting him do the right first.
While i have read the excellent post above by Hannah (money) there seems to be a lot of grey areas & its difficult for a bone head like me to digest easily.
Please give me some sound advice as i am dying! to make a few happy before i kick the bucket.
The other alternative is to fit a stainless steel roof rack to the top of the coffin!, & take the bugger with me aaahahahahahahaah.
mr bean

by robotrobo, 28 Jan 2013

Robo, if you read the post above from Nunoo who is in a similar position to you you will see that you do not have to worry if your total assets are below the IHT threshold. I assume you are married so you would need assets over £650,000 before you start to worry about IHT. So i say again, if your assets are below this it does not matter how much you gift, or how long you live, there are no rules for you to worry about.

by Bonz1957, 28 Jan 2013

My mum wants to pay off my ex husband and come live with me payin an amount towards my mortgage and converting somewhere in my home to live with us is this possible ??

by Max1, 29 Jan 2013

Of course it is Max. Unless she is delberately giving away money to avoid care home fees in the near future, then it is her money to do with as she wants. If she wants to pay her share of her keep, and pay for any alterations then neither of you should have any problems. Just to be on the safe side i would suggest you keep an informal record of who pays what and why.

by Bonz1957, 29 Jan 2013

Thanks so if she gave my ex a lump sum to release him from mortgage it would be ok ?

by Max1, 30 Jan 2013

The amount my mum will have total to use is about 100000£ if she sells her house well below Iht

by Max1, 30 Jan 2013

my mum is in a nursing home and paying full amount, she is selling her property only worth 50 thousand and has saving of about 5 thousand, can she give a gift of 3 thousand still each year as her money will soon be run out?

by sezzy, 6 Feb 2013

Sezzy, as your Mum's estate is obviously worth less than £325,000 then the figure of £3,000 is of no relevance. What is important in this case is the Local Authority may see any gifts given by your Mum as a deliberate attempt to avoid paying care home fees. You will need to do some research as to what is and isnt allowed on the gift front, as different authorities have different rules. You need to find out what they will allow your Mother to keep before they start to pay all of the fees. I believe this figure is around £23,000.

by Bonz1957, 6 Feb 2013

thanks very much for this information i will look into it more, my mum did a will years ago and left the house to me and my 2 brothers and she hates the fact that we will not inherite anything

by sezzy, 6 Feb 2013

thats why she wanted to give each of us a gift beforehermoney runs out

by sezzy, 6 Feb 2013

It's so wrong , Sezzy .
This rotton country is run by criminals .

by nadge, 6 Mar 2013

I'm in the same situation, I have just sold my mum's house, for around 50k but I want to use the money to convert my house so that she can live with us rather than a care home can this be done?

by chrised89, 17 Jun 2014

A friend would like to gift me 25,000 GBP for a mortgage on a house, If he lives over 7 years and has more than 325,000 estate would I need to pay tax on this amount? Can it be sent to my account by cheque? Thanks

by katieba53, 13 Feb 2013

There will only be IHT to pay if he dies within 7 years and his estate, including the 325k, is over £325k. If he survives 7 years then there is nothing to pay.
He can send you the money by which ever means is easiest; cash, chq or BACS.

by Bonz1957, 13 Feb 2013

Thanks for the info. Does he need to sign anything to show that the money has been given as a gift. Thanks

by katieba53, 13 Feb 2013

It would be as well to have some supporting documentation. Then you can prove the exact date and nature of the transaction should the need arise.

by Bonz1957, 13 Feb 2013

My mother in law wants to sell her house which she owns outright, use part of that money as a deposit for our house together with an annex. We will then have a mortgage on the other half of the house. Is this possible?

by jm11111, 14 Feb 2013

Absolutely. There is nothing to stop you buying a house together, but it may be worth getting something drawn up by a solicitor to lay down exactly who owns what % in case of any future queries.

by Bonz1957, 18 Feb 2013

if a friend of my gave 100000 pounds and he lives in Dubai , would i have to pay tax

by billde, 17 Feb 2013

You do not pay tax on a gift, regardless of where it came from.

by Bonz1957, 18 Feb 2013

If my father sells his property for £400k and gifts me the money from the sale what tax am I liable to pay now or when my father dies. Could I invest that money and gift the interest back to my father as an income? What are the tax implications here?

by johnd80, 25 Feb 2013

There is no tax to pay now. Your fathers estate will only be liable for IHT on the gift if he dies within 7 years of making the gift, and then on a sliding scale. If you gift the interest back there are no tax implications.

by Bonz1957, 25 Feb 2013

So my father gifting me the £400k and then me gifting him all the interest generated from investing that £400k each year wouldn't be seen as a 'gift with reservation of benefit'? This rule is fairly clear where gifting a home is concerned but not where money is gifted. To be clear my father would live off the regular gifted money and I would keep the £400k as my inheritance.

by johnd80, 25 Feb 2013

GWR usually applies to gifting a house and then continuing to live in it. It could depend on where you Father goes to live, see below.
https://www.gov.uk/inheritance-tax/inheritance-tax-planning-passing-on-property.
You would be best advised to check this with a solicitor, he will be aware of the implications, and will be able to advise you accordingly.

by Bonz1957, 25 Feb 2013

.

by Bonz1957, 25 Feb 2013

hi, my mother is into property letting, if she sells one her houses for say £100.000 and give the money to me and my wife to buy our own house dose she or we have to pay any tax? any help will be greatly appreciated.

by s_i_d, 26 Feb 2013

This has already been answered above, Sid.
No income tax to pay on either side, but IHT on a sliding scale would be payable if your mother was to die within 7 years of making the gift and the total value of her estate was over £325k.

by Bonz1957, 26 Feb 2013

She would have to pay capital gains tax on profit made selling the rental property immediately too

by markbor72, 24 Sep 2013

My family members and friends have given me money (total £40k) as a gift (investment) to start up a business. Mainly my brother and brother in law. The money has gone into my business account. Do I have to pay the tax on that amount?

If yes, then If I move the money out of business account to my personal account then as well will have to pay.

The money is gift to me.

by fadi30, 1 Mar 2013

Is it a gift that does not need paying back, or is it an investment where they expect a return?
There is a huge difference!!
Either way there is no tax for you to pay. BUT you need to draw up proper papers setting out how you came by the money and what, if any, return you are expected to make on it. Best to keep everything sorted in your business account to keep the Tax Man happy.
Maybe best to keep it in a personal account, where you could earn a decent rate of interest on it, and drip it into the business account as an when it is needed. That way you have a paper trail.

by Bonz1957, 1 Mar 2013

Thank you Bonz1957 for the quick response.

They don't expect any return on there money. Its a gift to me from them to start the business. so it will be ok to keep the money in business account or transfer it to personal account.

If i transfer the money now to personal account, then it will be ok as the initial entry of money will be in business account.

As mentioned in one of the other responses that it would be better to get the letter from the person that its a gift. So can you please advice me where can i find a template for this kind of letter.

Thanks again for the help.

by fadi30, 1 Mar 2013

Not sure a template exists for this that i am aware of. I was really meaning you should have something in writing if they were expecting to be repaid so that you would have something to show the tax man if required.
As a gift it would be fine as it is.

by Bonz1957, 1 Mar 2013

Hi. My wife and I have a joint estate of almost 1.4 million. We have given away about 100,000 to our two sons over the last 10 years to help with house purchases mainly. These past gifts have been 'informally' recorded as brief notes. We want to give away more to them in two ways: on a regular basis form excess income, which we understand is exempt from IHT. Also, occasional larger lump sums whilst we're young enough to see out the 7-year rule. What records do we have to keep to show evidence to the tax offices when executors are settling our estates? Do we have to advise the tax offices annually of such transactions? Thank you.

by mickey999, 6 Mar 2013

Hi mickey, we are in a very similar situation and seem to be making similar decisions. As far as i'm aware, there is no obligation to keep paperwork, so your informal notes should suffice. It is useful to keep a record as none of us know what is around the corner, but there is no need to notify HMRC. I presume you've read this:
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#6

by Bonz1957, 6 Mar 2013

Having read all the above posts I am still a little unclear. My husband and I have a joint worth of around 1 million. Recently he has given £150,000 to each of his 2 children as gifts. As he is a very sick man and unlikely to live for 7 years what would the tax inheritance tax liability be and who would pay it - me as the sole beneficiary of the will or the kids who have received the money? Or will this be covered by his IT allowance?

by invisible, 9 Mar 2013

Do you mind me asking if he gifted by cheque.i assume so as thats the only legal and proper way.Did the bank ask whats going on?
I ask because people have said that even though its your money they still want to know? Why ?I am assuming that yours went thru okay but if you would clarify.Did the bank ask you why.Did the tax people get in touch?Thanks.

by trailb, 26 Jun 2013

trailb, I've answered your query below, as well as sending you a message. There is nothing to prevent you from sending a payment by BACS or Faster Payments online, I seem to spend all my time sending my two money for one reason or another. Saves having to queue in a bank to pay it in.

by Bonz1957, 26 Jun 2013

My mum is being advised by a financial advisor to set up a trust with a life assurance 'wrapper' to safeguard her money from care home assessment if it becomes needed in the future. He says that it is still liable for inheritance tax if she dies within 7 years but with the 'taper rule' applying after 3 years. She wants to know how that would differ from just giving the money to her heirs now. The amount in question is less than the nil band rate but her overall estate will be liable to some inheritance tax. Can you help? Would the gift be counted in full towards her estate if she died within 7 years or would it also have the taper rule applied?
Thank you.

by birdiekes, 13 Mar 2013

My father in law is giving husband 100,000 as a gift...some kind of matured policy ...what are the tax implications? It is unlikely he will last 7 years by the way..

by ejanep, 15 Mar 2013

It depends on the total value of his estate. If under £325k then no implications. If over £325k then IHT payable on death within 7 years on a sliding scale after year 3, but this would be paid out of his estate.

by Bonz1957, 21 Mar 2013

Hi Just wondered if I won lottery and wanted to gift my family a million pounds would they have to pay tax straight away?

by emmaed, 21 Mar 2013

No. There is no tax to pay straight away on gifts.

by Bonz1957, 21 Mar 2013

thanks

by emmaed, 21 Mar 2013

Hi. My father recently passed away before giving me money towards my wedding. His estate is over 325k. Can the estate give me 5k tax free?

by Runaway-B, 24 Mar 2013

Once death duties are paid the estate will be paid out under the terms of your fathers will. Any payments will be tax free.

by Bonz1957, 24 Mar 2013

Hello, my Father just died, he has left me his property (no mortgage) valued £175,000 - but he did give me gifts of £60,000 during the previous 7 years before his death. Do I have to declare this money - as the entire estate in well under the £325,000? Would be very grateful for any advice.

by NOCLUE, 25 Mar 2013

If the total value of his estate, including the gifts, is below the £325k IHT allowance then there is nothing to declare and nothing to pay.

by Bonz1957, 25 Mar 2013

Thanks so much for that answer. Would I have to put the gifts on the probate form though?

by NOCLUE, 25 Mar 2013

Yes, if it specifically asks for that information. To be absolutely sure best to run it past the solicitor handling your fathers estate.

by Bonz1957, 25 Mar 2013

Thanks for that advice - I was told by solicitor if I should give that information on the IT (think its 250 form) & should not be liable for Inheritance tax

by NOCLUE, 26 Mar 2013

.

by Bonz1957, 25 Mar 2013

The rules of gifting money are made by HMRC. If a gift of money is made, within the limits, who monitors the giving?

by Balcam, 25 Mar 2013

there is not enough money for inheritance tax so can my father give away more. He is in a nursing home.

by elejon, 14 Apr 2013

If the estate is below the IHT threshold then he is free to give away what he likes.
However if he is in a care home the Local Authority may well come after you for any money he gives away if he has done it to avoid paying for his care.

by Bonz1957, 15 Apr 2013

Hi my mother has an estate worth below the inheritance tax threshold and as she is in a nursing home this decreases each year as the cost of the nursing home and other costs including gifts for birthdays and Christmas etc exceeds her pension both state and private so will never exceed £325,000. If she were to give a lump sum of several thousand each to various family members ie over £3000 I assume there is no taxation at all.

by destroy73, 20 Apr 2013

Hi Hannah - since my estate is likely to be well under the inheritance-tax threshhold (probably about £100K before solicitors' fees), is there anything stopping me selling up and giving all my money to my kids in a lump sum before I die?

If yes, what can I give them each year without any of us incurring tax?

by pistonbroke, 23 Apr 2013

As the value of your estate is well below the threshold then you can do what you want. There will be no tax for any of you to pay if you give it all to your kids. However if you plan to claim benefits, or get free care home care because you have no money then you may find they come after you or your kids for the money back.

by Bonz1957, 23 Apr 2013

Thanks - that's a relief!

by pistonbroke, 23 Apr 2013

Hi guys, I have £35,000 that I want to somehow "gift" my girlfriend so she can pay off half of her mortgage with her money and half with my £35k, she is in the Republic of Ireland, I am in the North atm. Her father is giving her €40k also for her half. How do I go about transferring the money to either her or her Dad to avoid tax and where possible exchange rates? Any relevant info you want to add will be appreciated. Links and further reading also. Thank you ALL very much!!! :)

by Rubber123, 2 May 2013

There are no tax implications for you giving your girlfriend some money. Though you should get some form of document drawn up stating what the loan is for, and your share of the house, should the two of you split up in the future. Would suggest the first place to start would be to see how much your bank would charge for the transfer, and then compare it to the deal you would get from going through one of the for-ex brokers in the list below.
http://www.money.co.uk/travel-money/best-euro-exchange-rate.htm
Unfortunately I know nothing about Irish tax, and as you said her father would give her €40k then i'm guessing he is also Irish. Either way there should be no tax for her to pay on the receipt of the money, but there may be future implications if, as is the case in this country, he falls foul of any inheritance tax rules or should need to go into a care home.

by Bonz1957, 3 May 2013

My father has recently moved in with us as he is unable to manage on his own. He is now in the process of selling his house. His estate will be below the inheritance threshold. He would like to give the proceeds of the sale to me. Is this possible? What would happen if later on he had to go into a nursing home? Would I have to give it all back? What would happen if I had spent some of it? Thanks

by woodytwoshoes, 12 May 2013

The IHT side of things is easy. As the estate is worth less than £325k then he can pass it all to you without any tax implications.
However, the potential care home costs are a bit of a minefield. There is no hard and fast rule, each local authority has their own rules. You really would be best advised to check with your councils social services as to what they would do. You really don't want them chasing you for money you have already spent - you could lose your home if they deem you have fraudulently used money that should have paid for care costs. A quick chat with them should give you all the info you need. There may be a time limit on them chasing money, or at least if you knew what the potential costs might be you could take an educated guess as to how much you could spend and how much should be saved.

by Bonz1957, 12 May 2013

If a very elderly gentleman resident in the UK were to make a gift of £5000 to his grandson who lives in France to help with his university tuition fees would the grandfather have to pay tax on it? Thanks

by eanne94, 14 May 2013

No. Though if his total estate is over £325k then IHT would be payable if he were to die within 7 years. Unless he is giving the gift out of excess income.
It could also cause problems if he were deemed to have given away capital to claim a benefit or avoid paying for care costs.

by Bonz1957, 14 May 2013

He is in his own home, totally independent and likely to stay so. This gift came from the sale of a work of art that he painted.

by eanne94, 14 May 2013

If it is from excess income - i.e. he has enough income to support himself (from pensions and painting) and make the gift without touching his capital - then there are no consequences of making the gift.

by Bonz1957, 14 May 2013

I have a parent who is elderly whose total estate is no larger than £130,000.
He has just had a policy mature with a value of £ 30,000. Can he split this amount between a Son and a Daughter and give as a gift without inheritance Tax?
Ian.

by idon, 15 May 2013

Ian: There would be no IHT to pay on an estate that small.

by Bonz1957, 15 May 2013

Hello, I am going to receive around 50k from foreign diplomats(family relatives). I am 16 would I pay tax?

by Atlantik, 20 May 2013

I think you are too young to be on this site

by Feline123, 20 May 2013

Haha. Not really, I manage my dads and uncles businesses. It's a university funding gift of 50k. I've been to the bank before to deposit 3-10k on various occasions and they have always asked where did you get this. But this is a larger amount, will I get taxed?

by Atlantik, 21 May 2013

Hi Atlantik, I wouldn't think so as this is a gift, and from people who are presumably outside the UK tax system. Suggest you contact the HMRC helpline for the definitive answer though...

Taxes Helpline:

Please have your National Insurance number with you when you phone

Opening hours
8.00 am to 8.00 pm, Monday to Friday
8.00 am to 4.00 pm Saturday

0845 300 0627

by fruitcake, 21 May 2013

Ok I will do thanks.

by Atlantik, 22 May 2013

You're welcome, Atlantik, good luck and spend your gift wisely... :-)

by fruitcake, 22 May 2013

:-)

by Atlantik, 23 May 2013

hi im new here.

my brother gifted my husband a house nearly 4 years ago worth around £80k. He is not married so if he were to die before the 7year mark would his IHT be £325k? If my brother were to get married in the next year and then die but still before the 7year mark does his IHT go upto £650k (because he is married now)?

Generally asking, if no-one keeps a record of cash gifts made (maybe because the giver is a very private person and keeps their financial dealings to themselves even from family members) then when they die how does the taxman know where the money is gone or even how much of it?

What happens to gifts made by someone who before the 7year mark becomes bankrupt?

Thank you.

by nas123, 1 Jun 2013

I would like to know what would happen if I win lets say £80 million on the lotto. Can I gift say £2 million each to 5 nieces & nephews & £5 million to a sister, what would be the implications then?

by kevin5, 7 Jun 2013

If you were to die within 7 years of making the gifts, then their value would be added to your estate to determine how much IHT would be payable.
http://www.thisismoney.co.uk/money/experts/article-1690145/Will-I-have-to-pay-tax-on-lottery-cash.html

by Bonz1957, 7 Jun 2013

V clear. Still wonder about drawing money or taking dividends from a share ISA to give away

by sirch46, 18 Jun 2013

You can give away as much as you like if it is from excess income, and you can still afford to live without having to draw on your savings.

by Bonz1957, 18 Jun 2013

Can selling bits of an ISA be income?

by sirch46, 18 Jun 2013

The dividends are income.

by Bonz1957, 18 Jun 2013

Are we saying that if a parent is under but they can donate 5,000 provided it hasn't't come from a savings account? If the parent only has the money in an everyday saver would they have to take it out of there and put it into a current account and then transfer as gift?

by 1oldwoman, 17 Jun 2014

my parents would like to gift me £30000 - would it be possible for them to pay it directly to my mortgage provider as a way of avoiding paying tax as a gift?

by bechdan, 19 Jun 2013

There is no tax to pay on a gift, either for the giver or the receiver.
If any IHT is due upon your parents death, it will be payable by their estate, and will be due regardless of how the gift is made.

by Bonz1957, 20 Jun 2013

this is so confusing. I decided to make a wedding gift to my only daughter.She is getting married .I am 63 so thought I will give her my life savings of my ISa and redundacy payment I just recieved 50k+.Her dad and i lead separete lives and alway have done especially over last decade or so altho for her sake I have not divorced him .He has a house 150k.I dont. So I am reading here people say you can only gift 3k and others saying they have been given or giving 40-100k and yet both seem to be saying you don't need to tell anyone(as I thought) and others say stuff about tax.

Do you need to tell anyone and if so WHO ?
Do you have to pay tax again ?
Did you people make out cheque as i did ?
If tax needs to be paid even tho I have paid already,then i dont mind but the more I read the more confused/worried I get and cant enjoy the fact that i was supposed to be helping my daughter out .

by janed, 23 Jun 2013

Janed, it all depends on your total wealth. If your total worth is worth more than £325,000 then there are rules and implications of making gifts. If your total wealth is worth less than £325k then you can do what you like. There is no income tax or immediate tax to pay on any gift regardless of it being under or over the threshold.
The only other thing you need to be aware of is, if you give capital away in order to claim a benefit, or to avoid care home costs, then this can be considered fraud and the authorities are within their right to come after you or the person you gave the money to in order to reclaim it, or refuse to continue paying the benefit.
You should keep records, but you do not have to tell anyone.
You do not pay any tax as either a giver or receiver.
IF any Inheritance tax is due after your death, it will be paid out of your estate, and not by the recipient, before what is left is distributed.
It is OK to make a gift by cash, cheque or bank transfer.
If you have any other queries, or your total wealth is over £325k and you have further questions, then please feel free to send me a personal message on here. Just click on my avatar and then on 'Send a Message'.

by Bonz1957, 23 Jun 2013

Thanks Bonz1957
Your reply seems to say that its okay to give any amount.I still have some for me. I did it properly cheque so what record do I need to keep and to show to who and when ?
Other thing is whats this about only being able to give 3k per year or 5k for a wedding.How does this fit in with those people saying they have given 40-100k?
I never heard of any of this before and assumed your own money was yours to give to whoever especially to your own child getting married and the age I am now I thought I may as well see her right.She has been golden as a daughter particularly with my family/marriage problems over the years.
Even with her Dad and me combined we are way below that threshold but like I said on my own it was my redundancy and isa.
Only thing which concerns me reading all this is the rules re;3k and 5k.That worries me .But saying i dont have to explain or tell anyone if its under 300k reasures me.

But why the contradiction ?

And also need to ask those people who say they gave 40-100k as gifts.was it all okay.Has anybody asked you why or whatfor.The girls at the bank did ask me and i told them but i nearly said why ask ?

by janed, 23 Jun 2013

Records only really need to be kept if your wealth is over £325k, or £650k for a couple as you are still married. Just a note or chq stub kept with your paperwork would suffice.
The £3k and £5k rules ONLY apply if you are over the IHT threshold of £325k. They are allowances that can be given away each year, or on a special occasion, and are not counted as gifts that would be counted when IHT is calculated.
From the brief details you have given you would seem to have nothing to worry about, as long as you still have sufficient capital and income for you needs.
Your daughter sounds like a credit to you.

by Bonz1957, 23 Jun 2013

Oh i see......the 3-5k only qualify if over the threshold ??? . I didn't understand that aspect at all .Sorry to be a pain but I am assuming that you are an expert .

I don't think both of us together are 200k .Only reason i dont divorce is its a bit late in the day and no need to upset my daughter with a bit of paper.She loves her dad. All i want is a quiet life. And she loves me so she is a credit to me.Bless you for saying that and also for answering my queries .Are you required to tell the banks what its for as you ask or pay in ? I did when asked.From the looks of it it seems quite rountine and I thought it was too till I read all this.

As anybody been in a similar position and can they give an update.

by janed, 23 Jun 2013

I am not an expert, but do have a basic working knowledge of the subject.
You are not required to tell anyone why you are writing out a cheque, nor is there any need to explain where it came from when paying it in, unless specifically asked which would not be normal.
There may be a query if you were to try and pay in £60k cash, but not with a chq from another UK bank.
From all you have said it does indeed appear to very routine.

by Bonz1957, 23 Jun 2013

Apologies to you before and thanks for your patience with me but one final point regarding the 3-5k gifts apply if OVER the 325k threshold.Is there any offical link to that anywhere as I can't find it .Because thats the bit thats worrying me the most.Even at the top of the article here thats all thats written but I dont see the bit where it says if its OVER the 325k.Like I say I and both of us together are nowhere near half of one persons threshold .My business was done thru the bank by cheque.They were chatting as they asked me but I was happy to tell them because its no secret from my point of view.
Then reading stuff about the 3-5k makes me think well......were they chatting or were they asking ! I thought I was chatting away.
Then of course i read about people giving 40-100k on here and I am thinking again ??
Does capital gains have any implications for the reciever of such a gift?

The whole thing is a minefield.I want to clear it in my mind so I can help plan this wedding and more enjoy it too .

by janed, 23 Jun 2013

The link below from HMRC details exempt gifts with regards to IHT.
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
The link quite clearly states "If your estate is worth more than the Inheritance Tax threshold - £325,000 for the 2013-14 tax year - there are some important Inheritance Tax exemptions that allow you to make gifts to others and not have to pay tax on them when you die".
All of the allowances and exemptions they refer to are in regards to legally gifting money that will not be taken into account when calculating any IHT that has to be paid.
There is no reference anywhere to the allowances that can or can't be paid if you are below the IHT threshold because they simply do not apply. Below the threshold you can do what you like, there are no rules or limits.
Capital Gains has absolutely nothing to do with it. It is a totally separate tax, and like Income tax has its own set of rules - none of which apply to giving money away.
There is nowhere that says what you can do if below the threshold as there are no rules, you can do what you want. Just like nowhere on a bus timetable will you see anything that says you do not have to pay a fare if you do not take a bus.
I have included an article which should put your mind at rest:
http://www.thisismoney.co.uk/money/experts/article-2161998/Can-I-away-3k-limit-relatives-tax-implications.html
It states "There's a great deal of confusion over giving away money and how it is affected by inheritance tax (IHT) rules. Most importantly, ANYONE can give away as much money as they want, whenever they want and to whom they want. Tax problems ONLY arise if your estate is worth more than £325,000 and you die within seven years of making the gift. A husband and wife or civil partners can pool their allowances giving them a £650,000 limit.
If you still have any doubts over what I am saying then suggest you consult a Solicitor who will charge you to tell you exactly what I have told you for free. Do not be confused by what other confused people have said or think.
YOU CAN DO WHAT THE HECK YOU LIKE, the £3-£5K rules ONLY apply to those with more than £325k who wish to make IHT exempt gifts.

by Bonz1957, 23 Jun 2013

Does that mean I can take £3000 from my capital by selling part of an ISA each year and give £1000 as a gift to my 3 daughters on their birthdays? if I don't want to use my income. Our capital is over £650,000 limit. And if my income is sufficient give them £1000 each as a regular gift for Christmas? And can my wife do the same if her income is sufficient?

by sirch46, 24 Jun 2013

sirch46, if you are using you annual £3,000 gift allowance then it makes no difference where the money comes from, capital or income. Suggest you thoroughly read the IHT section on the HMRC website below. It is very thorough and explains everything very clearly. There is a section on being able to give away income from excess income.
http://www.hmrc.gov.uk/inheritancetax/

by Bonz1957, 25 Jun 2013

Interesting debate and response from experts .Reading all the different scenarios that people have described may I ask what are the implications if I gift £100000 to two children to be fair.£50.000 to each.There is someone at the beginning of the article who has gifted £150000 .We are two parents and worth is £300000.But since this business of if parents can help get them on the property ladder we thought this is a good time.So if I made a cheque out for this amount....do i need to explain what it is to the bank ? Some bright spark says theres some trigger that sets off...............for what ? Why? When?
I have ISA's.stocks,bank accounts so i would need to either give cheques at different times or collect in one place and then make a cheque.Point being-----normal Joe is made to feel as if whats going on if you give your own kids a helping hand yet what are parents for if you can't.Govt wants to to help yet reading all the tax stuff scares you off.All answers welcome particularly from Bonz

by trailb, 26 Jun 2013

Happy to oblige, trialb. If your total wealth, ie all savings, investments, property, etc is less than £325k per person, or £650k for a couple, then you are not subject to the £3k or £5k rules mentioned above. You can do what you like. The IHT rules are for people above the threshold who want to use these allowances to give money away outside of the IHT rules.
As ever if you are deemed to have given money away in order to claim a benefit or avoid care home costs then there could well be repercussions.
Eve if you were above the threshold you could still give away what you want. But the value of the gifts would be taken into account when the IHT bill was calculated, with the gift being potentially exempt if you live for 7 years, or taxed on a sliding scale if you were to die within 7 years. Any IHT that was payable would normally be paid from your estate before the remaining funds were distributed. There is no tax to be paid now on any gift, either for the gifter or the giftee.
You children are indeed fortunate that you are able to help them, and I hope suitably grateful. Even if you estate was large and IHT would be payable, you may still decide to gift them money now when they need it, and pay any tax due when you die, Rather than them having to wait until after your death to receive any money.
If you write them a cheque, or transfer the amount online by BACS, it is no-ones business. You are exceedingly unlikely to have anyone query it. Though it would be worth keeping a paper record with your accounts in case any executor needs to refer to it when sorting out your estate. If you expect to survive 7 years - terribly morbid all this talk of death - it may help to prove that gift was made over 7 years ago.

by Bonz1957, 26 Jun 2013

Sorry Bonz, I don't think I have been asking my question well. At the moment we would be over the £650,000 limit. Assuming I have just about the right income to live on but not so much as I could give money away from income and if it was likely we would both die well before the seven years. Can I sell some of my share ISA's to fund a gift under the £3000 exemption rule... Actually £12,000 for my wife and I as last years allowance has not been used. How would I need to record this manoeuvre for my estate?

by sirch46, 27 Jun 2013

sirch46, it makes no difference where the funds come from to make a gift, you can sell part of an ISA, take from savings, etc.
You only need to keep an informal written record with your accounts, something that the executors of your will can refer to when calculating what IHT may be payable.
At the end of the day, if you give away nothing now, or restrict yourself to the allowance limits, then IHT will normally be paid from your estate before the remaining funds are paid out. You may well decide that it is in everyone's interest to give away say £100k to each of them now if they wanted to buy a house. No tax to pay now, and then when your estate is assessed for IHT these gifts are taken into account before working out what IHT is to be paid. Should one or both of you survive 7 years then these gifts would be potentially exempt. You would have helped your children now, and potentially dramatically reduced your IHT bill in the future. Even if you are both unfortunate enough to die very soon - sorry, I hate taking about death - and these gifts are not classed as exempt and IHT free, then they are no worse off as any tax will be assessed before the remaining money is released. Exactly the same amount of tax will be paid, but you have helped your children now, while you are still alive, rather than them having to wait until after your death. A Win Win situation.
With the prospect of your estate having to pay £40k IHT on every £100k over your combined £650k total allowance, it may well be worth spending a few £'s now talking to a Solicitor or Tax Planner to make sure you do the right thing now to minimise your future IHT bill.

by Bonz1957, 28 Jun 2013

Hannah - fantastic article!

Whether you're in the run up to retirement, have had retirement forced upon you or are already retired then Reeves Independent service is for you.

If I'm giving my friend money (out of my savings) to help them out with their bills, and the total I've given them is over 3k, is there any tax due?

by SartorialDog, 1 Jul 2013

No, not now. Though in certain circumstances there may be an IHT bill to be paid out of your estate after your death if your total wealth is over £325,000.

by Bonz1957, 1 Jul 2013

Ok thanks. So I can continue to help them out without the worry of unpaid tax?

by SartorialDog, 1 Jul 2013

There will be no immediate tax to pay, though as I said it may lead to a future IHT bill.
Just be wary of how much you lend to a friend, it can ruin a friendship if they are unable to repay the loan.
We have had quite a few questions on here asking how they can take legal action against an ex-friend who is refusing to repay money that was lent in good faith.

by Bonz1957, 1 Jul 2013

Thanks Bonz1957 for the advice. It's not a load though, I am paying the bills without ever wanting anything back in return. They need help, and I'm in a postion to help.

by SartorialDog, 3 Jul 2013

Hi. I have 3 children, and would like to put £30,000 in each of there accounts for their futures. My total estate is above £325,000. Would this mean that in order to avoid being taxed 40%, I must live 7 years after the transfer date?

by Smiffa, 2 Jul 2013

Yes. Though if you die within 3-7 years then IHT at a reduced rate applies.

by Bonz1957, 2 Jul 2013

Thank you. That's comforting to know. I will open a savings account in each of their names and transfer the money into them. I intend to live a little longer than 7 years. I'm 39 by the way, so lets hope that's the case.

by Smiffa, 2 Jul 2013

My husband wishes to' loan' his son £15000. Our wills are organised so that everything up to the IHT limit goes to the children, the rest to the spouse. I believe I read somewhere that if father and son make out and sign a loan agreement then within the 7 year limit there would be no tax - is that correct please?

by abrace, 16 Jul 2013

I have read all above, but still trying to understand the other side, my wife's best friend gifts money to our family mainly for our kids its way over 3,000 at a time, I am concerned we need to pay Tax on it (we have our own Incomes and don't live off her money) please help as know I am panicking a bit, thanks

by eano, 17 Jul 2013

My 80 year old Mother will have an estate of £530k ish and a tax free allowance of about £400k when the unused amount is carried over after the death of my stepfather. She wants to help us make some changes in our house to accommodate her when she stays with us (alternate weekends) or if she needs to come and live with us at any time in the future. Eg downstairs loo and ripping the bath out in the family bathroom and putting in a shower. If she pays for this work, will this count as eligible for consideration for IHT?

by Bushbaby58, 24 Jul 2013

As I read it, and I am no expert, she is free to spend her money as she sees fit. If she was to spend say £2,000 on a holiday it would have no effect on her estate or any IHT bill. Likewise, if she wants to spend £2,000 on conversions to your house for when she comes to stay, then it should also have no effect on her estate or IHT position.

by Bonz1957, 24 Jul 2013

Hi! However many times i read Tax rules I still cannot seem to get my head around them. I need to send my mother £10,000 can i do this without being taxed?. As far as i can work out as long as i do not pass in the next seven years (being 28 I do not plan on it) i should be good to do this, is this correct? cheers

by LCH, 29 Jul 2013

You are free to give away whatever you like, neither you or your mother will have any tax to pay now.
Should you die within 7 years, and if your total estate is worth more than £325k, then there may be an IHT liability. But this would be paid from your estate before the money is paid out to your beneficiary's, your mother would not have to pay a penny.

by Bonz1957, 29 Jul 2013

I would like to gift my brother whom lives in UK 200,000 pounds as a gift. I'm a uk national living and working in the Dubai. What are the tax implications on me once I go back to England, and would I need to prove the source of the money at any time in the future. Finally, would I need to show this on the self assetment form at any point in time ( i have never filled one yet and I'm 39 years old married )

by gassano, 1 Aug 2013

Dear Bonz, I can't find your answer to this question....I have a distant relative who wants to gift me a substantial sum of money from the middle east, you seem to be saying there are no tax implications for me? Nor do I need to inform HMRC of this gift---it would not be considered income?

by cluso, 14 Aug 2013

Hi gassano and cluso. The same answer would appear to apply to both of you. It will all depend on the Domicile of the person making the gift. If they are not regarded as being a UK domicile then they will pay any IHT or similar in their country. Either a foreign national, or an ex-pat would only be liable to UK IHT on their UK assets. And in all circumstances the recipient is not liable to declare or pay tax on any gift received. Though the recipient will then have the gift become part of their estate and will be considered for IHT upon their death if their estate is then worth more than the current limit of £325k for IHT purposes. More details can be found in the HMRC link below.
http://www.hmrc.gov.uk/cto/customerguide/page20.htm
Hope this is of some help.

by Bonz1957, 19 Aug 2013

thank you Bonz for your patience and your answer, much appreciated

by cluso, 19 Aug 2013

Thanks :)

by gassanoo, 23 Nov 2013

A friend of mine wants to gift me £100,000 to help me buy a house. She is terminally ill and not expected to live longer than 4 months.. Her estate is worth millions.. When she passes away, will I have to pay the inheritance tax, or will it be taken out of her estate before the estate is allocated to family members? I'm a little confused by it all.. Thanks in advance.

by ellemiller, 3 Aug 2013

Any IHT tax due will be paid by her estate.

by Bonz1957, 3 Aug 2013

So I won't need to worry about the tax man knocking on my door for £40k?

by ellemiller, 3 Aug 2013

No. Just hope her family members don't want it back.

by Bonz1957, 3 Aug 2013

My mother gave me 25k 6yrs ago she has now gone into a nursing home,will this money have to go towards her care.

by vag777, 9 Aug 2013

Only if the Local Authority deem that it was given away to avoid paying for care. As it was 6 years ago they may have a hard case to prove, so I would not worry unless they want a detailed look at her recent finances.

by Bonz1957, 9 Aug 2013

If I did have to pay how much of the 25k would I be expected to pay back

by vag777, 28 Aug 2013

There are no set rules, they treat each case on its merits. You may have to pay all of it back, or they may decide you can keep the amount below which she would not be liable to pay her own costs any more.

by Bonz1957, 28 Aug 2013

Thank you.

by vag777, 9 Aug 2013

how would the tax office know i had made a gift

by valerie36, 10 Aug 2013

Probably only if they decided to do an audit on you. Maybe because they saw a dramatic drop in the savings interest you were declaring.
Though this is unlikely. And unless your total estate is worth more than £325k the rules on gifting and allowances do not apply

by Bonz1957, 19 Aug 2013

My father passed away in 1989. Does that mean that my mother now has £325k X 2 = £650K IHT threshold. Thank you

by carolb19, 17 Aug 2013

Possibly, it will depend on what was done when your father passed away. This is such a complicated subject it is probably easier for you to read the link below from HMRC.
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm
Should you still have any questions you may want to consult the family solicitor or a tax expert.

by Bonz1957, 19 Aug 2013

Hi. My mum has recently received an inheritance and wants to give me £55000 of this towards my new home we are about to purchase (we could then drastically reduce our mortgage) She will hold an equal amount to one side for my brother for when he may need it. She claims its my inheritance anyway, and she wont miss what she never had (bless her!)
Providing she lives for 7 years - god willing, I guess we'd be ok. However in the here and now would we have to declare this anywhere as its over the limit for yearly allowances and where and how much would her gift cost us?
All I seem to read is "if they pass away" - but what about now?
Thanks

by lauraj217, 19 Aug 2013

This has already been covered so many times.
It's her money to do with as she sees fit. IF there is any IHT to pay when she passes away - ie if her estate is worth more than £325k including any gifts she has made - it will be dealt with by her trustees and the tax due, if any, will be paid before the remainder of her estate is paid out to her beneficiaries.
You do not have to declare it, nor will you have to pay any tax on it now or at any time in the future - regardless of how long she lives.

by Bonz1957, 19 Aug 2013

Thanks for all your information Bonz you have given me the answer to a problem I thought I would have and this has relieved me greatly. Thanks again for all the time and trouble you spend on sorting all of us out. xx

by Sabre, 28 Aug 2013

.

by Bonz1957, 19 Aug 2013

I have power of attorney over my uncle's finances. He is in a nursing home. He has £20, 000 left in his account after paying for his care for the last 5 years. In his will I will inherit anything left after his funeral expenses. He wants to give me some money now as he says he doesn't need it. Can I transfer this to my account as a gift? Does he need to put this in writing?

by Pam1505, 28 Aug 2013

Hi Pam. If you transfer it you are likely to find the Council coming after you wanting to know why he can no longer pay his care home fees. You need to check what the limits are as to how much longer he has to pay his own fees. I think the limit is around £23,500, below which he no longer has to pay all of his own fees. Check with the Local Council, and if you can prove that he is now below the threshold, they will take over paying for his care and the money he has left can be passed on as he wishes.

by Bonz1957, 28 Aug 2013

My daughter is selling a flat because she has married and gone to live in her husband's house. She wants to give me the proceeds from her flat to fund my retirement. Is that permissible without paying any tax?

by Hugo, 12 Sep 2013

Yes it is. It is her money to do with as she wishes. There will be no tax for either of you to pay now.
Just be aware though that a sudden influx of money into your accounts may have an effect on any means-tested benefits you may be currently receiving. Also if there is any likelihood that you may need to go into a Care Home in the near future the local Council may make you use that money to pay for the fees.
Depending on both of your circumstances it could make financial sense for your daughter to keep the money in her name and pay you a monthly allowance

by Bonz1957, 12 Sep 2013

That's very helpful advice. Thank you.

by Hugo, 12 Sep 2013

You're most welcome, Hugo.

by Bonz1957, 12 Sep 2013

Mum was left house when dad died , she disclaimed telling me to go with dads will , he left diff shares to his kids as she was staying with me , witch she did for 8 years died at home . Now brother trying to see if there is money , didn't come to see her once in the 8 years where do I stand

by Mistyloo, 16 Sep 2013

The house would have been your Mothers, to do with as she saw fit. It may be worth consulting a Solicitor to see where you stand. You may have to pay for his time, but it could be money well spent if your brother decides to contest her will or take you to court for half of what she left.

by Bonz1957, 16 Sep 2013

I've been reading up & just want to make sure I've understood everything... My parents are divorced and I believe each of their estates are worth more than £325k. They're both retired so they don't have a large income, but have enough assets to support themselves (e.g. if they needed a care home). They very generously each want to contribute towards a deposit on a house for me (£8k & £32k), and would probably give the same amount to my sister. If they both live more than 7 years after gifting the money there would be no tax to pay. If one/both die before the 7 years I'd have to pay 40% on the amount they'd gifted me (or possibly less if it was more than 3 years after) (but I could pay this from any inheritance after tax I received at that time). Is this correct? Thanks.

by Bobby77, 20 Sep 2013

Hi Bobby, and apologies for not replying sooner.
As far as I can see you have understood things perfectly, and have an excellent knowledge of how the system works.
It would be in everyone's interest for your parents to reduce the value of their estate below the £625k threshold as soon as possible, to increase the chances of not having to pay IHT.

by Bonz1957, 13 Nov 2013

I'm a foreign citizen currently working in UK. If a send every month around 500 pounds of my income to my unemployed mother abroad, do I get any tax free allowance on this sum.

by Lala86, 21 Sep 2013

No.

by Bonz1957, 21 Sep 2013

Can my parents gift me 20K towards a house purchase, without being liable for inheritance tax? Their estate is less than 250k etc?

by bladds, 25 Sep 2013

Yes they can. They can have joint assets of £650k before they have to worry about IHT. Neither you or they would have any tax to pay.

by Bonz1957, 25 Sep 2013

My wife and I have joint accounts. As we are two people, are we allowed to give £6000 a year (i.e. £3000 each)?

by andrewr14, 6 Oct 2013

Whether you have joint or sole accounts, each individual has an allowance of £3,000 to make gifts that are exempt from IHT - useful if your estate is over £650k combined.

by Bonz1957, 6 Oct 2013

My Father has passed away with out a wil , we are thinking of making a deed of variation and leaving it all to our mum will that save tax ? , also is there any way our mum will be able to give us a large cash pay out lump sum or set up a trust ??

by alan2343, 7 Oct 2013

Hi Alan. Am not sure there is any need to do anything as all of his assets would pass to your Mum anyway. A Deed of Variation is only set up to alter something in a will, if there was no will then there is no need for one.
Whether your Mum, can easily pass money on to you will depend on the value of the estate. If your Fathers share was under £325k, meaning that now your Mothers Estate is under £650k, then she can do what she likes with the money. Even if it over £650k she can still do as she wishes, but there may be IHT to pay by her Estate should she die within 7 yrs.
If in any doubts then you would be best advised to consult a Solicitor. A few hundred pounds spent on his time will ensure that everything is done in the most tax efficient way.

by Bonz1957, 7 Oct 2013

thanks , been advive since 2009 law changed with out wil 250k and family home goes to my mum , rest goes 50% to kids 50% in s
trust so my mum can live of it , estate worth about 1.5mil , so if my money gave me 100k and lived over 7years would it be taxable ?

by alan2343, 7 Oct 2013

It is my understanding that if she survives 7 years the gift becomes IHT free. But with an Estate of that value you really do need to consult a Solicitor. His advice could save you thousands of £'s in tax.

by Bonz1957, 7 Oct 2013

thanks

by alan2343, 7 Oct 2013

If a friend gives me 200K, not expecting any repayment, do I have to pay any tax? do we need to draw up some documentation or can it just be a gift?

by trina1987roy, 8 Oct 2013

There is NO tax for either of you to pay now. Depending on his circumstances, there may be IHT to pay after his death, but this will be paid out of his estate, and not by you. It is always useful to have some paperwork noting the date, amount and reason for the gift just in case there are any queries years down the line.
Lucky you to have such a generous friend.

by Bonz1957, 8 Oct 2013

My father passed away just under 3 years ago and all monies passed to my mother. My mother has advanced dementia and is soon to go into a nursing home. Her total estate would be around 270,000 (savings & house). My father always wanted to leave something for my brother and I but due to his illness and long frequent periods in hospital he just never had a chance to do anything about it before his death. My brother has power of attorney over the estate as detailed in my fathers will due to my mothers advancing dementia. If my brother was to use the power of attorney to gift each of us £50,000 from my mothers savings leaving roughly £30,000 savings and the house do you think that would be looked at as trying to avoid paying care fees?

by phone61, 23 Oct 2013

That could depend on the value of the property, the cost of care and how long she may need it. As long as you are prepared to sell the house to fund the care home costs when the £30k is exhausted then there shouldn't be a problem.

by Bonz1957, 23 Oct 2013

Hi There,

Wonder if anyone can help. My parents are loaning me 40k to put down a deposit on a house. The mortgage company will not do a mortgage, unless it is a gift. So I have got my parents to do a letter to say it is a gift.

Am I right in thinking as long as they do not die within 7 years, there will not be any tax to pay.

Thanks for your help.

by btb14, 24 Oct 2013

Sorry I did not mean to comment on that thread, apologies.

by btb14, 24 Oct 2013

Hi There,

Wonder if anyone can help. My parents are loaning me 40k to put down a deposit on a house. The mortgage company will not do a mortgage, unless it is a gift. So I have got my parents to do a letter to say it is a gift.

Am I right in thinking as long as they do not die within 7 years, there will not be any tax to pay.

Thanks for your help

by btb14, 24 Oct 2013

Also my parents estate together is less than the 650k (combined). Is this relevant? Or would it only be if they were giving me the property?

Thanks

by btb14, 24 Oct 2013

A mortgage company will want to see a letter saying that the money is an outright gift that you do not have to repay or pay any interest on.
If any IHT is due it would be paid out of their estate after death before the money is distributed. There is no tax for you to pay either now or then. And yes, if they survive for 7 years, then the gift is likely to become exempt for IHT purposes.

by Bonz1957, 24 Oct 2013

Yes I am providing a letter to this effect.

If my parents estate is worth less than 610k (325k +325k -40k gift), then even if they did both die within 7 years (not nice to think like that) it would be exempt anyway?

Thanks for your help.

by btb14, 24 Oct 2013

It could be, but would depend how things were treated on first death.
If in any doubt best to speak to a Solicitor, a few £'s spent now could save £1,000's in IHT later.

by Bonz1957, 24 Oct 2013

Hi, my mum was taken into care about 6 weeks ago due to alzeimers, because she has no family of note living in the area. As she owns her own home, valued about £70k, the local authorities are footing the bill until the house is sold. I have lived in Asia for a number of years and in Oct 2012 she asked me to visit her and that she would pay for the flight as I could not as I am retired with only a small taxable pension. While I was here in the UK she also gave me a cash gift of £5k. From the beginning of this year she deteriated and as I previously mentioned is now in a care home. My son, who lives 300 miles away and who she took care of for many years when he was a young boy, is looking after her finances asked me to return to the UK for the legalities as the house needs to be cleared and sold. He paid for the flight from my mother's bank account. We have done all that has been required to make her as comfortable as possible and my son has kept all records of all transactions. My question is what are the tax implications regarding the travelling expenses and cash' gifts'. Thanks

by rayw, 7 Nov 2013

Hi Bonz and others.
This is an excellent article and forum. I need to ask a question and get an opinion.
My wife and I are trying to sort out our will [mirror will]. I am in my early 50's.
Our combined assets would probably be over £650,000.
We have two sons - one adult and the other still a minor.
If I want declare in my will that I wish to make a cash gift of say £25,000 to each of our sons that is payable when I am no more, would that be subjected to IHT at that time if the total assets amount to more than £650,000? What would be your suggestion to get around this problem?
Thanks and looking forward to your response.

by saabu, 8 Nov 2013

Hi saabu and apologies for the delay. If you were to die first then your half would pass to your wife with no IHT to pay. You could give each of them £25k upon your death, but my understanding is that IHT may still be payable upon your wife's death. What would IMO make more sense - and is what we are doing now being of a similar age and financial position - is to give them the money now, then if you survive for 7 years the gift is likely to be free from IHT.
For the few £'s it will cost it may well be worth running this past a Solicitor. His fee's will pale into insignificance compared to the IHT at 40% they could have to pay if you die leaving more than £625k in the pot.

by Bonz1957, 13 Nov 2013

Thanks Bonz. Your reply is much appreciated.

by saabu, 24 Nov 2013

i am thinking of selling my house and the equity will be 180000 i am thinking of splitting this in two and gibing hald to my son and half to my daughter will i have to pay tax

by satigi, 13 Nov 2013

There is NO tax for any of you to pay now. Depending on the total value of your estate, there may be IHT to pay after your death, but this will be paid out of your estate, and not by them. It is always useful to have some paperwork noting the date, amount and reason for the gift just in case there are any queries years down the line.
There could be consequences if you are giving away capital to claim a benefit or avoid care home costs, in which case the Council could ask for the money to be repaid.

by Bonz1957, 13 Nov 2013

My father died back in January this year. My Mother has sold the house and invested the funds in Building societies. I am the only child and will be the only benificery to the funds when my Mother dies. In the meantime, she would like to give me some of the funds 'upfront'. Can she do this?. I have no problem with paying inheritance when the time comes. I would declare the 'upfront' payment then, so I have no intention of trying to loose money now.
Does anyone out there have any advise please.

by carpe97, 16 Nov 2013

Your Mother is free to do what she wants with her money, there would be no tax to pay now for either of you. As long as she is not giving away capital in order to claim a means-tested benefit, or to avoid future care home fees, then there is unlikely to be a problem. Depending on the total value of her estate, and how long she survives after making the gift, then there may not be any IHT to pay. And as you say, any IHT that may eventually be payable will likely be paid from her estate before the money is paid out to the beneficiaries. In fact it could be very tax efficient to give away a sum of money now so that the estate is brought down below the IHT threshold.

by Bonz1957, 16 Nov 2013

Thank you for your reply to my question.
Would I have to declare the funds received from my Mother on my yearly tax return form, and if so, what would I declare it as, ie...gift?.
Also, I would like in invest this money into my South African bank account where the interest rates are much better than here in the UK.
I hold dual nationality for both UK and SA. Would this be against the law?.
I am still unclear as to the amount my Mother could gift me. The amount of 3,000 pounds paid as a yearly total, keeps cropping up!.
She would like to give me 110,000 pounds, which is +/- a third of her total estate.

by carpe97, 17 Nov 2013

Here's my question...I think it's answered above in a roundabout way but want to check.

My mother in law is currently selling her house worth £200k (her only asset, no savings, nothing else at all). She will be moving in with my wife (her daughter) and I shortly (in our current rented accommodation). The plan being to buy a house for us all to live in shortly. My wife and I will be paying the mortgage, mother in law cannot be on mortgage due to age. Mother in law wants to gift my wife and I the entire amount from her house sale as deposit, amounting to approx £130k when mortgage is paid. As I understand it the deposit needs to be in our name to get the mortgage.

Anyway, by gifting us c.£130k, my mother in laws only asset, will this cause any problems tax wise? Do we need to declare this to HMRC? She's never going to have anywhere near the £325k inheritance tax limit, so I don't think this is an issue but just want to check!

by robellis82, 16 Nov 2013

No need to declare now and no tax to pay now. Unlikely to ever be any IHT to pay. Only problems that may arise would be if she were to claim a benefit or be deemed to have given away capital to avoid care home fees. The only thing I can see is that the lender may want to know the source of the funds used for the deposit, and whether there are any conditions on the gift. But a good independent mortgage broker should be able to offer advice on this matter.

by Bonz1957, 16 Nov 2013

Many thanks Bonz.

by robellis82, 17 Nov 2013

Thank you for your reply to my question.
Would I have to declare the funds received from my Mother on my yearly tax return form, and if so, what would I declare it as, ie...gift?.
Also, I would like in invest this money into my South African bank account where the interest rates are much better than here in the UK.
I hold dual nationality for both UK and SA. Would this be against the law?.
I am still unclear as to the amount my Mother could gift me. The amount of 3,000 pounds paid as a yearly total, keeps cropping up!.
She would like to give me 110,000 pounds, which is +/- a third of her total estate.

Read more: http://www.money.co.uk/article/1004329-how-do-i-gift-money-without-being-taxed.htm#comment173403#ixzz2kvGV4OgG

by carpe97, 17 Nov 2013

There is no need to declare the gift on your tax return, just as you would not declare a lottery win or a win on the horses.
Once it is given to you, it is yours to do with as you like. You can move it anywhere in the world, it is not against any law, as long as you declare any interest earned in the normal way.
The £3,000 limit only applies to the amount that can be given away each year and will not be included in the calculations for IHT purposes. Your Mother can give you £50k, £200k, £500k, whatever she wants. You have already said you are happy to pay any IHT that may be due at some point in the future, so the £3,000 thing is a complete red herring. Much better to give you the money now when you need it and you account for the IHT later, than struggle along waiting years for your inheritance. The end effect will be the same, you still get the same amount of money, you just get it now rather than later. You could even end up with more if she survives the gift by 7 years making it exempt from the calculations, and IHT free. The most tax efficient thing to do would be to give away the excess above £625k and survive for at least 7 years.

by Bonz1957, 17 Nov 2013

I read this on the internet saying you can give money from your post tax wages, is this legal and how is it done as I would like to give £1000 per month to my wife as she has retired with very little pension and I am paying 40% tax as I have to work more to make up her wages.
"Give away your income not your savings - You can give away as much of your income away as you please without paying tax. Hargreaves Lansdown said this concession "is widely under-utilised, particularly by those with higher incomes". If you are using this avenue, it must be a regular gift from post-tax income and leave you with enough money to maintain your standard of living".

by dave217, 20 Nov 2013

Think you will find that they were referring to ways to avoid paying Inheritance Tax. You can give away excess income to your children to take it out of the reach of IHT. It doesn't work to save Income Tax by gifting to a spouse, Sorry.
http://uk.finance.yahoo.com/news/stop-giving-money-to-the-taxman-instead-of-your-children-145917209.html

by Bonz1957, 20 Nov 2013

I would like to ask - Can a person who is neither a spouse nor part, or the family member,just friend and simply just wants to give a monetary gift of £ 50,000, or its legal to take it? if I do not need pay taxes? If a person will offer monetary gift form, or there can be no hidden thing?how i need to take it to insure myself if you can - write me a personal message

by Angelasunny, 22 Nov 2013

There is nothing to stop a gift being made to, or accepted by, a non family member. There is no tax for anyone to pay now, any tax that may be due when the person who made the gift dies will be paid by their estate.

by Bonz1957, 22 Nov 2013

So if i will accept it, i dont do any notlegaly?And how can i accept it - by bank transfer only or my cheque?and that person later cant say that ohh, she take it from me( you know i always look or there is any catch or etc.) i want to insure myself because i respect this land and law, so i made my own research

by Angelasunny, 23 Nov 2013

They can give it to you as a cheque, bank transfer or cash, it makes no difference. Though if you are worried about their motives or honesty, then maybe you should get something in writing from them saying it is a gift.

by Bonz1957, 23 Nov 2013

Thanks a lot !! i very appreciate your help and answers. One more thing, when i meet up with that one friend to sign papers that he agree that it is monetary gift and etc, he said - sign it, i said - but it says i need sign it when i receive it. he said, ok i will open new account to you and transfer it and you can send it to you account or where you want, of course i know that anyone can open account without me and my proof of identity, so i said you cant do that, then he said that its same account type when like example you open to your child and etc. and he said - no matter how but i will do that, and as well he notice - taxman can ask you where from did you get these money so it need go to new account and etc, but i said - if i will have monetary gift letter, thats it, i dont need any explanations, and in bank as well assistent said that what they care, that my account will be safe. and, monetary gift is not returnable? liek example, if person make a money transfer to my account like gift he cant say after 2 weeks - oo give it back to me.Anyway i still need make research to be sure that i insure myself.. :(

by Angelasunny, 23 Nov 2013

You do not need a new account, and he will not be able to open an account for you. If he is happy to give you a cheque or cash then that will be OK, but the more obstacles he seems to be putting in the way the more it starts to sound dodgy. The ta man will not care where you got the money from if it was a gift. Just beware of him wanting to open accounts for you, or wanting you to pay anything to get the money. A Gift is a Gift, no strings, very straightforward, but this seems very complicated

by Bonz1957, 23 Nov 2013

i would like to ask you, or that letter should have sentence which one sais: `that there is no expectations of repayment/repayment of the gift in cash or service ? Or gift is gift and thats it?

i try to write u personal message but i cant send it

by Angelasunny, 1 Dec 2013

I would have thought that "that there is no expectations of repayment/repayment of the gift in cash or service" would be more than adequate.

by Bonz1957, 1 Dec 2013

Letter which one i need to sign when will get money says;

Date
MONETARY GIFT
I, NAME SURNAME, agree to monetary gift in the sum of £_____
To NAME SURNAME for her education.
When you have received the full monetary amount as stated ,please sign and date.
May this contribution bring you outcome you are hoping for....

Or thats ok? it doesnt say : ``that there is no expectations of repayment/repayment of the gift in cash or service" but then or its still looks fine and without strings?

by Angelasunny, 1 Dec 2013

It looks OK. And there is nothing to stop you adding any extra text when you sign it. So if you wanted to add "I understand that there is no expectations of any repayment of the gift in cash or kind" before you sign it they shouldn't object.

Make sure you take a copy of the signed letter for yourself before you return it.

by Bonz1957, 1 Dec 2013

Thanks;) so when that person transfer money to my account, then i check it, and only then i can sign papers, leave one for me, and like that person said, one for him, And thats it? After 3 months, like example, he cant said that i need to return it or that i stolen them, or i dont know, that i take it by fraud, you know, its just my imagination talking, but i think always good idea to make own research ;]

by Angelasunny, 4 Dec 2013

Just make sure that his name and address is also on the letter so everyone is sure as to who made the gift. If you can get him to sign both copies as well then all the better.

by Bonz1957, 4 Dec 2013

HE said he is happy to sign it and put his name surname email and phone number there, but no adress, but i will ask about it. so there is no chance to take back that gift from me when we sing papers? i just like to cover myself,maybe he desperate in love to me and want to catch me, and after that gift making he decide make problems to me or etc.

by Angelasunny, 4 Dec 2013

My father in law is a full-time carer for his wife. If he dies she will have to have residential nursing care. His current will leaves everything to her, and hers to him. Would it be better for him to change his will leaving his estate, including his half of the property, to his two children rather than his wife as a means of protecting the assets from being swallowed up in care fees?

by martin21, 23 Nov 2013

What a great forum. Is there a difference is tax liability for the person making the gift if they are resident in the UK or not. Transfer will be from UK bank to UK bank. As the receiver of the gift I appreciate that I have no liability but I dont want them to cause a problem for themselves? Thanks

by Cameron1977, 2 Dec 2013

Thank you for your kind comments. We do our best to help where we can.
If the person making the gift is not a UK resident, or regarded as a UK Domicile, then they would not be subject to UK taxation. They may however be subject to taxation in their own country.

by Bonz1957, 3 Dec 2013

Thank you Bonz, I am surprised at people's repetetive questions, if this were a paid service there would be a level of personal research (reading the above posts perhaps?!) that would be done before asking the same question. Then if people had ambigious or different questions to ask the blog would become a valuable source of complete information on the subject.....FYI people, you don't pay tax on a gift!!!!

by Cameron1977, 4 Jan 2014

Spot on Cameron, but I bet the question is still asked another 100 times!!
The problem with how the site is laid out is that people read the article and then ask a question in the box underneath, without ever realising it has already been asked many times further down the page.

by Bonz1957, 4 Jan 2014

my mother wants to gift me £20,000 do I have to pay tax on it

by kerry47, 17 Dec 2013

NO. There is no tax for you to pay on a gift. Not now, not ever.

by Bonz1957, 17 Dec 2013

Hi I bought my mothers council property 11 years ago my mother gifted me her long term tenancy allowance of 60% worth £15,000. my mothers name remained on the land register and we had a deed of trust stating on death the property was entirely mine. my mother has recently died without a will but the deed of trust still stands but there is a question that I might be liable for gift tax of the £15,000 is this true?

by gilbert1, 29 Dec 2013

Hypothetic question!
If my friend was to win the lottery and gave me £500000 as a gift and that person lived longer than 7 years, would i be liable for income tax or capital gains tax on that amount, if so when would i have to pay it?
Or, if they didn't live for 7 years after they gave it to me but within that time I had spent all the money and they had no assets left, would i still be liable for IHT on my gift amount, even though I had no money to pay it?

by lisa_k, 4 Jan 2014

There is NEVER any Income or Capital Gains Tax to pay on a gift.
Any IHT is only paid on an estate worth more than £325K, so if they died with nothing there would be nothing to pay.
IHT is generally paid by the deceased's estate and not by beneficiaries or the recipient of any gift. There are exceptions to this rule, but they tend to relate to property, and not to your hypothetical question.

by Bonz1957, 4 Jan 2014

Thanks for the response. Could you tell me, why do people bother with a work syndicate then, is it purely to do with trusting the employees involved to make sure you get your share?

by lisa_k, 6 Jan 2014

It is more to do with having more chances to win. Say 20 of you all put in £2 a week then you have 20 chances to win, unlikely you would consider spending £40 a week on the lottery. Plus there is the social element.

by Bonz1957, 9 Jan 2014

Sorry, I meant actually filling out the syndicate form rather than paying in as a group. Why do people bother to fill out the form when just one employee could claim all the money then just gift it to the other employees (is it lack of trust?)

by lisa_k, 10 Jan 2014

There is always likely to be one person who will want things done properly so that there can be no misunderstandings in the event of a big win.
What would happen if the person who was responsible for buying the ticket met with an accident or died suddenly? Legally the winning ticket would belong to their family, could be a lengthy court case trying to prove otherwise. Always better to be safe than sorry.

by Bonz1957, 10 Jan 2014

What about money-laundering considerations? What is the level at which the authorities will take a close look? No, I'm not a criminal... just a Canadian who might want to help his UK-based daughter from time to time.

by walto5, 4 Jan 2014

If you live and are domiciled in Canada for tax purposes then you will need to look into what their rules are concerning the gifting of money, you would not be subject to UK rules.
Your Daughter would not be subject to any UK tax on the receipt of a gift from you, and it is very unlikely that you would be subject to any investigation from the authorities.

by Bonz1957, 4 Jan 2014

Hi,
my mum has 13000.00 and would like to give me 4000.00 and 4000,00 to my brother and 5000.00 to my other brother, but would we get into trouble if she does.

by sam12, 6 Jan 2014

No. Unless she is giving the money away in order to claim a benefit, or to avoid paying for care home costs.

by Bonz1957, 6 Jan 2014

Hello Bonz, my Father, US based, wants to gift an amount of £40,000 to assist with the purchase of a second house, which we will repay immediately upon the sale of our main residence, within 8 months hopefully. What are the tax implications for me and him? Also, we have a family friend who wishes to assist in the amount of £150k, but he is based in UAE, can this work?

by Intrepid333, 8 Jan 2014

Hello Bonz, from rereading the above posts I am aware that I pay no tax on a cash gift. Are there financial/tax implications when I repay the cash?

by Intrepid333, 9 Jan 2014

From what you have said there are no tax implications for them gifting you the money or for you returning it to them. Apart from the fact it is a much larger sum then it is no different to lending a mate £20 down the pub and him giving it back to you the following week. May be worth having something informal in writing just to say what the loan is for and the proposed timescale to keep everyone happy.

by Bonz1957, 9 Jan 2014

thanks very much

by Intrepid333, 9 Jan 2014

I have an estate in excess of £1m. If I gift my son £400K as a PET and he subsequently, voluntarily, pays my care home fees of, say £100K would that negate the whole loan and bring it back into my estate?

by woolfebear, 9 Jan 2014

Why would you not pay your own care home fees out of the £600k+ that remains? Would suggest, for sums of this size, that you run this past a Solicitor who will be best placed to advise.

by Bonz1957, 9 Jan 2014

Assume most of the rest is property But thanks for responding Bonz1957

by woolfebear, 9 Jan 2014

What a Freudian slip. I, of course, meant "negate the whole GIFT".

by woolfebear, 9 Jan 2014

My friend's daughter is my god-daughter. How much can I give her each year without paying tax if I do not die within the next 7 years?

by eckers, 13 Jan 2014

You can give her as much as you like. Neither of you will have to pay any tax on the gift. If your personal circumstances are such that the gift is counted in the IHT calculations after your death - whether before or after 7 years - then any IHT that is due is paid by your estate before any monies that are left are paid out to your beneficiaries. She will never have to pay any tax. All of the rules on gifting, allowances and IHT, ONLY apply if you are worth more than £325K, if not you can do what you like. Though the authorities may want to investigate if you deliberately give away money to claim a benefit or avoid care home fees. If you are worth more than £325k then you may want to read the link below from HMRC which details what you can give away each year without those gifts being counted for IHT, or having to live for 7 years for them to become exempt.
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

by Bonz1957, 13 Jan 2014

Thank you for your response. I am worth more than £325k and I still have a long way to go before I retire and therefore hope to live more than another 7 years! I have looked at the HMRC page that you recommend and from what I read, she will not qualify as an exempt beneficiary. However, it looks like I can give her £3k per year under the annual exemption. The small gift exemption won't apply if I have already given her the £3k annual exemption. I could also make regular monthly payments assuming it doesn't affect my standard of living. If I live more than 7 years then none of these gifts is eligible to IHT and does not need to be added back to my estate. Have I understood this all correctly please?

by eckers, 17 Jan 2014

You are correct in your understanding, though there is no need to limit yourself to £3,000. That figure is only an allowance that is exempt for IHT calculations, there is absolutely nothing to prevent you gifting more. Depending on your personal circumstances, your total amount gifted, what you are worth when you die and how soon you die after making any of the gifts, they may all be free from IHT.

by Bonz1957, 18 Jan 2014

My friend's daughter is my god-daughter. How much can I gift her each year without paying tax if I don't die within the next 7 years?

by eckers, 13 Jan 2014

looks like I posted this twice in error!

by eckers, 13 Jan 2014

If my mother is likely to go into care and owns her own home and has up to 10k savings can she give a gift to my sister, brother and myself?

by ellajo, 17 Jan 2014

Hi ellajo

You need to take advice on this as, depending on the value of the property and how long your Mother may need care, the Local Authority could ask for the money to be repaid if they deem it has been given away to avoid care home costs.

by Bonz1957, 17 Jan 2014

can I gift either one of my parents 30,000 GBP without incurring tax

by T9Qwerty, 21 Jan 2014

Yes, there is no tax to pay on a Gift.

by Bonz1957, 22 Jan 2014

If my Father (who lives in the US and is a US citizen) wanted to give me some money (I am a US citizen living permanently in the UK) would I need to pay tax on it?

by gingerkinter, 21 Jan 2014

That will depend entirely on US Tax Laws, you would not be liable to any UK Taxes.

by Bonz1957, 22 Jan 2014

thanks

by gingerkinter, 22 Jan 2014

Can you parents give you a Gift of 15/20.000 Towards deposit on a house without any tax burden?

by Kmbrass, 23 Jan 2014

When giving the £3000 allowable gift to my son, I take it that this would be classed as drawings and not as an business expense

by Flappy, 27 Jan 2014

Kmbrass: No tax for either to pay now, but depending on your total wealth and personal circumstances, there may be IHT for your estate to pay after your death.
Flappy: Neither, it is treated as a Gift.

by Bonz1957, 28 Jan 2014

My gran changed her will before she died in favour of her youngest daughters son as the daughter was having marital problems and they wanted to safe guard the money from the husband! Anyway it's now all hunky dory and he wants to gift the money back to his mother! From reading all the above this is entirely possible if it's less than 325k or is there more complications because it was inheritance? The will has not yet been read but there is a great possibility of iht (650k threshold)

by Icarly21, 30 Jan 2014

Can I give money to my boyfriend without him being taxed for it?

by joann55, 4 Feb 2014

hi. my situation is pretty complicated and I don't know where should I go with it. my husband and I are Polish and weve been in the uk for 7 years. we live in a rented property. my mum who suffers from MS moved to uk 5 years ago. shes also renting a flat. she wants to sell a flat (worth approx 30k GBP)she owns in poland and give all the money to me so that I will be able to pay a deposit for a house I wish to buy. is it a deprivation of assets or do I need to pay any tax? do I need to inform hmrc or my bank of the gift? thank you

by mola, 6 Feb 2014

My parents are selling there house for 170k. Both healthy and should be around after the 7 years. They will pay off thete remaining 7mortgage and with the 100k left give me and my brother 13k and 20k. Is tax payable on this. Thanks

by lozwest, 10 Feb 2014

My mother want to gift me £60000 pounds would I have to pay capital gains tax

by holgate81, 11 Feb 2014

Is inheritance tax is:£325k doubled for widowed spouce from 1976 the allowance I mean on an estate valued over 325k but not over 650k

by suzie178, 17 Feb 2014

When it talks about gifting in a year, is that within a year or each tax year?

by carolin23, 18 Feb 2014

Hello, a friend wants to gift me 80k towards the cost of a house. Their 'estate' is worth less than 250k currently and the person is in their 50s. Note. This is a friend and not a relative. Is this friend able to 'gift' me this amount? Is there any tax liability or anything else I should be aware of? Thanks.

by bigdaddy46, 22 Feb 2014

If I sold my house for £450,000 and then gave £50,000 to each of my three adult children and bought another property for myself for, say, £300,000 can you confirm that no tax at all would be payable by any of us as long as I lived for another 7 years?

by janero99, 1 Apr 2014
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