If I gave someone 20k.....

Mr^B · 21 Oct 2009 at 21:22

Kemik said:
Source? You can give £5000 to your daughter or son IHT free at their wedding but I've not heard anything about Christmas or a Birthday.

Source was the solicitor and tax adviser dealing with my grandmother's will.

Guess the tax adviser needs to start reading up a bit!

Regular gifts or payments that are part of your normal expenditure

Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.

These include:

* monthly or other regular payments to someone
* regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
* regular premiums on a life insurance policy - for you or someone else

You can also make exempt maintenance payments to:

* your husband, wife or civil partner
* your ex-spouse or former civil partner
* relatives who are dependent on you because of old age or infirmity
* your children, including adopted children and step-children, who are under 18 or in full-time education

http://www.direct.gov.uk/en/MoneyTa...oTax/InheritanceTaxEstatesAndTrusts/DG_179336

Still that's only the government's site about IHT, what do they know?

Wedding gifts do have a limit of £5,000 though.

Johnny Girth · 21 Oct 2009 at 21:29

Mr^B said:
Source was the solicitor and tax adviser dealing with my grandmother's will.

Guess the tax adviser needs to start reading up a bit!

http://www.direct.gov.uk/en/MoneyTa...oTax/InheritanceTaxEstatesAndTrusts/DG_179336

Still that's only the government's site about IHT, what do they know?

Wedding gifts do have a limit of £5,000 though.

That talks about regular gifts made out of your normal expenditure. You can't just suddenly make a one off gift, particularly if it doesn't leave you with enough to continue living your usual lifestyle.

It really only covers rich people giving expensive birthday/Christmas presents that would otherwise fall outside the annual exemption.

As has been said, potential IHT consequences but won't be any capital gains tax.

Mr^B · 21 Oct 2009 at 21:37

Johnny Girth said:
That talks about regular gifts made out of your normal expenditure. You can't just suddenly make a one off gift, particularly if it doesn't leave you with enough to continue living your usual lifestyle.

It really only covers rich people giving expensive birthday/Christmas presents that would otherwise fall outside the annual exemption.

As has been said, potential IHT consequences but won't be any capital gains tax.

Just making sure that the thread is accurate, the items I mentioned do not fall under the standard IHT rules - that's all I said. I made no assumptions as to where the 20k comes from (if you get a 20k bonus, for example, giving 20k and maintaining your current lifestyle is perfectly possible).

/me shrugs.

Vonhelmet · 21 Oct 2009 at 22:05

Mr^B said:
Just making sure that the thread is accurate, the items I mentioned do not fall under the standard IHT rules - that's all I said. I made no assumptions as to where the 20k comes from (if you get a 20k bonus, for example, giving 20k and maintaining your current lifestyle is perfectly possible).

/me shrugs.

That wouldn't be a regular gift, so no, it wouldn't qualify.

And by the way, HMRC play pretty hard and fast with the law. What their website says and what the statute books say are often somewhat disparate.

Mr^B · 21 Oct 2009 at 22:10

vonhelmet said:
That wouldn't be a regular gift, so no, it wouldn't qualify.

And by the way, HMRC play pretty hard and fast with the law. What their website says and what the statute books say are often somewhat disparate.

It would be regular if you received it every year. Which is how an annual bonus works.

/me shrugs - don't shoot the messenger.

Kemik · 21 Oct 2009 at 22:17

Edit: doesn't matter.

Vonhelmet · 21 Oct 2009 at 22:19

Mr^B said:
It would be regular if you received it every year. Which is how an annual bonus works.

/me shrugs - don't shoot the messenger.

Ah, OK, if it was a regular 20k bonus, then that could work.

Ace Modder · 21 Oct 2009 at 22:22

take the 20k as cash and put it under the mattress, dont let the greasey government get there mitts on any of it.

cheechm · 21 Oct 2009 at 23:04

Ace Modder said:
take the 20k as cash and put it under the mattress, dont let the greasey government get there mitts on any of it.

Mr^B · 21 Oct 2009 at 23:22

Ace Modder said:
take the 20k as cash and put it under the mattress, dont let the greasey government get there mitts on any of it.

A transaction that large would be flagged up if IHT was investigated. You'd have to withdraw small amounts over a irregular period, and then deposit them in the same way.

You'd be better off just gifting 20k and trying not to die for 7 years.

BubbySoup · 22 Oct 2009 at 00:22

Just to reiterate my point, you have to fulfill 2 conditions for the gift to get IHT'd.

1. Die within 7 years of giving the gift.
2. Your estate at the time of your death - including the gift you made, is greater than the current IHT threshold.

Only then does the gift become eligible for IHT

magick · 22 Oct 2009 at 02:53

How will the government find out that you've recieved 20k unless you told them?

I'm pretty sure if you'r friend opens a new bank account and you transfer 20k to it from your account and your friend tells there bank, if they ask, it was a gift it won't go any further than the three of you.

magick · 22 Oct 2009 at 02:57

And if you'r really worried about IHT open a swiss bank account transfer the money there then transfer it from there to your friends account. As far as i'm aware Swiss Banks won't give out detials of your account status or any transactions to foriegn governments unless it's proven there the proceeds of very serious crimes like extortion or dug trafficking and even then they still might refuse.

Vonhelmet · 22 Oct 2009 at 08:21

magick said:
And if you'r really worried about IHT open a swiss bank account transfer the money there then transfer it from there to your friends account. As far as i'm aware Swiss Banks won't give out detials of your account status or any transactions to foriegn governments unless it's proven there the proceeds of very serious crimes like extortion or dug trafficking and even then they still might refuse.

I think the revenue are smart enough to figure out what's going on if you send your money overseas and shortly after your friend receives a similar amount from overseas.

magick · 22 Oct 2009 at 09:24

vonhelmet said:
I think the revenue are smart enough to figure out what's going on if you send your money overseas and shortly after your friend receives a similar amount from overseas.

Maybe but how would the inland revenue find out who his friends are? I can't see how the IR would know who a person has associated with when they die.

Sukh · 22 Oct 2009 at 09:38

Sorry to ask, but if your parents pay rent, does it have to be at teh market rate, or whatever you choose?

Ant123 · 22 Oct 2009 at 10:17

anticonscience said:
Give it me and I will tell you.

lol

Vonhelmet · 22 Oct 2009 at 10:21

Sukh said:
Sorry to ask, but if your parents pay rent, does it have to be at teh market rate, or whatever you choose?

Market rent.

jamief · 22 Oct 2009 at 10:36

magick said:
How will the government find out that you've recieved 20k unless you told them?

I'm pretty sure if you'r friend opens a new bank account and you transfer 20k to it from your account and your friend tells there bank, if they ask, it was a gift it won't go any further than the three of you.

If your friend receives £20,000 in his account from overseas, you can bet your life that the bank will report it under money laundering regulations.

Basher · 22 Oct 2009 at 11:07

A friend transfered 20k to me a few months ago. No tax implications.