Finance experts please

booyaka · 2 Feb 2016 at 10:30

So much bad information in this thread it's unreal.

@OP - find a new accountant as your current one is useless. Possibly worth speaking to a Chartered Tax adviser due to your mums age and the likelyhood of some potential IHT bill in the future.

Not just on this gift, but the rest of her estate would be a concern as well.

Simple things to do -

record the gift, short letter or note that explains what you mum is giving you, the amount, the date etc - this makes life easier when it comes to IHT calculations/estate at a later date. Both sign it etc.

Plenty of basic reading here -

https://www.gov.uk/inheritance-tax/gifts

Remember also that "regular" gifts from income are exempt from IHT - 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 (this can be annual gifts as well so long as they are regular)
regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
regular premiums on a life insurance policy – for you or someone else

i5aces · 2 Feb 2016 at 13:11

we were talking about something like this at work the other day, and someone raised the question, what would stop them both going to a casino changing cash for chips, have a few drinks and watch the entertainment some casinos have then at the end of the night cash the chips back in.
mum lost, son wins.
I have seen some silly sums of money go over the poker and roulette tables.

cheesyboy · 2 Feb 2016 at 15:03

i5aces said:
we were talking about something like this at work the other day, and someone raised the question, what would stop them both going to a casino changing cash for chips, have a few drinks and watch the entertainment some casinos have then at the end of the night cash the chips back in.
mum lost, son wins.
I have seen some silly sums of money go over the poker and roulette tables.

Casinos don't like people buying large quantities of chips for cash, and have a statutory requirement to report large cash purchases to the Serious Organised Crime Agency. They are also often arses about letting someone cash in huge stacks of chips, with extra ID checks and other unseen checks (probably checking table data or footage) before they hand over the readies.

i5aces · 2 Feb 2016 at 16:22

cheesyboy said:
Casinos don't like people buying large quantities of chips for cash, and have a statutory requirement to report large cash purchases to the Serious Organised Crime Agency. They are also often arses about letting someone cash in huge stacks of chips, with extra ID checks and other unseen checks (probably checking table data or footage) before they hand over the readies.

we were talking about it for a diffrent reason but the idea would be the same.
I did think there must be something in place to stop this happening otherwise everyone would do it. My friend was certain that it was the best way to go, in the end I had to concide that yes it was possible but the ammount of time he would need to spend in a casino to be able to move 68k that way would make it unworth the effort.

booyaka · 2 Feb 2016 at 17:05

i5aces said:
we were talking about it for a diffrent reason but the idea would be the same.
I did think there must be something in place to stop this happening otherwise everyone would do it. My friend was certain that it was the best way to go, in the end I had to concide that yes it was possible but the ammount of time he would need to spend in a casino to be able to move 68k that way would make it unworth the effort.

ultimately it could be classed as a form of money laundering even

dowie · 2 Feb 2016 at 17:15

i5aces said:
we were talking about something like this at work the other day, and someone raised the question, what would stop them both going to a casino changing cash for chips, have a few drinks and watch the entertainment some casinos have then at the end of the night cash the chips back in.
mum lost, son wins.
I have seen some silly sums of money go over the poker and roulette tables.

there is nothing to stop them from doing that... just as there is nothing to stop the parent saying something like I bet you the value of my estate that you can't sprint 100m in 20 seconds etc.. it is just complete balls and everyone can see through it

deliberately losing a bet to pass on a huge sum of money is really obvious for HMRC and you'll likely not get away with it

you could both open an poker stars account and one could deliberately lose on a heads up table - essentially just chip dump the lot

it is just far too transparent and obvious - unless you both regularly gamble or play online poker at high stakes then it is instantly suspeicious

PhilGQ · 2 Feb 2016 at 21:39

Merlin5 said:
Thanks all, a lot of info. But my mum wants to give me the full amount now, not 3K a year. I need the whole lot now, it needs to go into my account ready for the lease and conveyancing fees. As far as her dieng within the next 7 years, unfortunately it's very likely. So do I get her to make me a cheque for the full amount or not?

Sorry, I wasn't clear. I was not suggesting 3K per year.

I meant that if £30k is given, £3k of it is ignored completely for IHT (£6k if previous years gift allowance is unused). Therefore only £24k will be a potential IHT issue for your mum.

Assuming you mum has made no other gifts above Gift Allowance in the last 7 years, the £24K will use some of your mothers £325k IHT exemption (the Nil Rate Band).

So when she dies her Nil rate band will be £301K for use on the rest of the estate (excluding any transferred nil rate band from a deceased spouse and then new main residence nil rate band when it comes in). If she lives for 7 years without any more gifts over £3k per year her nil rate band goes back up to £325k

Taper Relief does not apply to gifts that are within the nil rate band. It would apply if a gift of more than £325k was given, but only on the bit above nil rate band. eg. If £425K was given taper relief would be available on the Inheritance Tax on £100k.

Bottom line is if she doesn’t make the gift her nil rate band stays the same but she has an extra £30k in her bank account potentially subject to tax.

Ace Modder · 2 Feb 2016 at 21:54

McGray said:
Launder it then.

I mean, my word....

make sure you use a Miele washing machine to launder it, they are the only good brand.