Relative gifting money

Discussion in 'Off Topic' started by abu13, 6 Nov 2019.

  1. DrBlueBob

    DrBlueBob

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    Would I be correct to say that although they may gift as much as they like, anything over a threshold (£3k I think) per annum, the recipients are liable for income tax?
     
  2. DrBlueBob

    DrBlueBob

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    My parents in law have been going through this and the financial assessment was a fairly low key affair that involved filling in a questionnaire about what money they had in their account. It does not follow that they will automatically demand access to everything, probably current account and deposit accounts going back over a year would suffice. Technically if you or they hide funds then it is fraud. Additionally be careful that helping them does not compromise your own tax situation.
     
  3. SWP's back

    SWP's back

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    No, absolutely not.

    Not sure why everyone keeps going on about this £3k annual gifting allowance. That’s to do with IHT and even then would only be needed if the estate was over the nil rate band (£325k single parent or £650k married couple - up to £1m with main residence relief).


    No income tax on gifts.
     
    Last edited: 7 Nov 2019

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  4. flook

    flook

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    This explains the difference between inheritance tax and income tax on gifts

    https://www.shepherdsfriendly.co.uk/your-resource-centre/gifting-money-to-children

    SWP's Back is correct that there is no income tax liable on gifts to children, but there are limits on what gifts you can give away to avoid inheritance tax (this is where the 7 year survival rule comes in).

    What isn't crystal clear to me is if I bung my daughter £20k (fat chance in case she's reading) and then pop my clogs after 5 years, bearing in mind my age (54) this would be an unexpected demise, so the 20K gift would clearly have been given in good faith and not in an attempt to avoid IHT. Even so I suspect (though I'm not sure) that this gift would then be subject to IHT
     
  5. DrBlueBob

    DrBlueBob

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    Quick Google search and the first entry says exactly what you say. No idea how I got that so wrong. Thanks for making me bloody annoyed with myself!
     
  6. SWP's back

    SWP's back

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    Hi bud, I’m a financial adviser that specialises in tax and trust but I still appreciate you agreeing that I was right.

    To answer, absolutely no, your gift wouldn’t be seen as trying to avoid IHT. A gift like that is known as a potential exempt transfer. For the first few years, if you died (assuming you’ve used up your nil rate band by leaving 325/650k - assuming no property takes you over that) then the gift would attract tax of 40% tapering down to 0% if you survived 7 years.

    But as I say, gifts only come into it IF your estate is over the nil rate band.
     
  7. flook

    flook

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    ah thanks for clearing that up, Financial adviser eh? location "by the pool".....not reading anything into that ;)
     

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