Gift money

[neocon]

Is it true that you can't just gift someone money without tax implications?

E.g a mother gives her daughter £10,000 via bank transfer.

From what I have read you are only allowed to "gift" £3000 in one tax year.

Let's say the daughter has a £10,000 credit card debt, and her mother post it off, is that allowed?

 

[HoneyBadger]

I believe it’s allowed but if the mother dies within 7 years then the daughter would have to pay an amount of tax.

 

[neocon]

I believe it’s allowed but if the mother dies within 7 years then the daughter would have to pay an amount of tax.

I have also seen this. There is a sliding scale that tapers off to zero tax owed after 7 years.

 

[glenimp617]

Cleaning services are expensive these days

 

[peterwalkley]

Pretty good write up here: https://www.moneyadviceservice.org....can-i-give-to-my-children-and-family-tax-free

In your example, the tax calculation is only relevant if mum dies within 7 years. From memory, the IHT limit is £325,000 (£650,000 for the last surviving married partner), so if the total estate value is less than that, there is no tax to pay.

 

[postbox]

Pretty good write up here: https://www.moneyadviceservice.org....can-i-give-to-my-children-and-family-tax-free

In your example, the tax calculation is only relevant if mum dies within 7 years. From memory, the IHT limit is £325,000 (£650,000 for the last surviving married partner), so if the total estate value is less than that, there is no tax to pay.

If the money paid was from your parent's joint account, and say, Mum dies within 7 years, does the deadline/exemption date not get passed over to the other parent?

 

[peterwalkley]

If the money paid was from your parent's joint account, and say, Mum dies within 7 years, does the deadline/exemption date not get passed over to the other parent?

I'm no expert, but would assume so. From OP's post I was inferring that mum is the sole surviving parent.

In many cases its completely irrelevant as the total estate value is likely to be under the IHT threshold and that would become even more likely if this thing about excluding the family home from the estate value ever become law.

In practise this works by there being a declaration of gifts to children within 7 years when filling out the IHT declaration forms. If that was "forgotten" I really doubt the revenue have the time and manpower to go back and check for 10 grand. Add some zeroes on the end and it would be a different matter.

 

[cheesyboy]

You can do what you like with your money, the only comeback is, as mentioned, that IHT will be due if you die within 7 years AND the estate is large enough to exceed the IHT threshold.

And the inheritance tax bill will fall on the estate rather than the recipient of the cash gift.

 

[the shadow]

I believe it’s allowed but if the mother dies within 7 years then the daughter would have to pay an amount of tax.

what about if mom lives in australia can she just gift any amount

 

[skyripper]

what about if mom lives in australia can she just gift any amount

Surely thats a question for a Australian Tax advisor, or at least a forum populated by many aussies...

 

[BowdonUK]

I'm not a legal person. I've been looking in to this subject recently.

One thing I've noticed is that there is a lot of confusion about the process, not helped by so called helpful websites either.

Tax only becomes an issue if your mother as an estate of over £325,000. If shes no where near that then I would ignore this 7 year rule thing because you can't avoid tax that you aren't legally obligated to pay.

The only potential issue for us non-rich folk is when it comes to care home fees. If you're mother needs to go in to a care home or any service that the council might end up paying for, they will do a financial check to see if she can pay the care fees herself. If they see shes been offloading money then they might think shes deliberately doing it, its called deprivation of assets. https://www.ageuk.org.uk/informatio...aying-for-a-care-home/deprivation-of-assets/#

 

[Psycho Sonny]

Is it true that you can't just gift someone money without tax implications?

E.g a mother gives her daughter £10,000 via bank transfer.

From what I have read you are only allowed to "gift" £3000 in one tax year.

Let's say the daughter has a £10,000 credit card debt, and her mother post it off, is that allowed?

the £3000 limit is exempt from inheritance tax even if they die within 7 years.

so if someone gifts you £3,000 every year for 6 years then dies. you don't pay any inheritance tax.

if they gift you £18,000 then die then £6,000 of it would be tax free as you can use the years before's allowance if you haven't used it up already. therefore the remaining £12,000 would be taxable.

so even if it's the same amount you were gifted it depends on how it was done. as you say £3K is giftable with zero tax implications what so ever. and it can be doubled if not used the previous year.

you can gift £3k to as many people per year as you like with zero implications.

 

[Psycho Sonny]

I'm not a legal person. I've been looking in to this subject recently.

One thing I've noticed is that there is a lot of confusion about the process, not helped by so called helpful websites either.

Tax only becomes an issue if your mother as an estate of over £325,000. If shes no where near that then I would ignore this 7 year rule thing because you can't avoid tax that you aren't legally obligated to pay.

The only potential issue for us non-rich folk is when it comes to care home fees. If you're mother needs to go in to a care home or any service that the council might end up paying for, they will do a financial check to see if she can pay the care fees herself. If they see shes been offloading money then they might think shes deliberately doing it, its called deprivation of assets. https://www.ageuk.org.uk/informatio...aying-for-a-care-home/deprivation-of-assets/#

i'm not being funny here but any person could have an estate easily worth a million these days even if they worked minimum wage their whole lives.

they would just have happened to have bought a home in the right area at the right time.

even outside of London. I know of homes which sold for £60K - 30 years ago now worth £700K in Glasgow for instance.

 

[Orionaut]

the £3000 limit is exempt from inheritance tax even if they die within 7 years.

so if someone gifts you £3,000 every year for 6 years then dies. you don't pay any inheritance tax.

if they gift you £18,000 then die then £6,000 of it would be tax free as you can use the years before's allowance if you haven't used it up already. therefore the remaining £12,000 would be taxable.

so even if it's the same amount you were gifted it depends on how it was done. as you say £3K is giftable with zero tax implications what so ever. and it can be doubled if not used the previous year.

you can gift £3k to as many people per year as you like with zero implications.

And you can give larger gifts than this and still be exempt of IHT as long as it is regular and comes out of earnings rather than capital.

IE in principle, You can gift £1000/month as long as it comes out of income, does not run down your capital, and does not come at the expense of reducing your standard of living (Which is rather harder to assess)

 

[HungryHippos]

You can technically back date this by a year as well if you haven't given anything away in the previous year. So in the OP's example gifting £10K could include a £3k allowance from the previous year, and a £3k allowance from the current year.

 

[Deleted member 77746]

Just donate a little bit at a time. People work hard enough as it is without been screwed over everywhere. I'm sick of these types of systems.

 

[BowdonUK]

i'm not being funny here but any person could have an estate easily worth a million these days even if they worked minimum wage their whole lives.

they would just have happened to have bought a home in the right area at the right time.

even outside of London. I know of homes which sold for £60K - 30 years ago now worth £700K in Glasgow for instance.

Yes, but the point I was making is that there are more people under the £325,000 (£650,000 if a couple) rule than over. In 2020, if everything goes to plan, the allowance will go up to £500,000 (£1 million for a couple).

But because its not written out in plain english then the people in the low rent/rougher part of town are sat worrying if they can donate a few thousands to their sons or daughters.

Though to be fair we don't know the OP's mothers financial situation to give accurate advice. If her estate is worth more than £325,000 then she would be liable for tax. If under then as far as I can see, no problem. But I'm not a legal expert.

 

[BowdonUK]

I've just found this updated Which article that has an inheritance tax calculator. So you can type your numbers in and it'll tell you how much tax you'll have to pay.

For me it said £0

https://www.which.co.uk/money/tax/i...ax-thresholds-rates-and-who-pays-avrxm3k7kgxw

 

[Psycho Sonny]

Yes, but the point I was making is that there are more people under the £325,000 (£650,000 if a couple) rule than over. In 2020, if everything goes to plan, the allowance will go up to £500,000 (£1 million for a couple).

But because its not written out in plain english then the people in the low rent/rougher part of town are sat worrying if they can donate a few thousands to their sons or daughters.

Though to be fair we don't know the OP's mothers financial situation to give accurate advice. If her estate is worth more than £325,000 then she would be liable for tax. If under then as far as I can see, no problem. But I'm not a legal expert.

you don't need to be a legal expert to understand the guidance on the .gov website. it's written in plain english.

 

[subbytna]

Is it true that you can't just gift someone money without tax implications?

E.g a mother gives her daughter £10,000 via bank transfer.

From what I have read you are only allowed to "gift" £3000 in one tax year.

Let's say the daughter has a £10,000 credit card debt, and her mother post it off, is that allowed?

Get mum to pay the card off directly.