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  • FIRST POST
    pmartin86
    10,000 "gift" from parents to child - Taxes?
    • #1
    • 14th Nov 12, 8:58 AM
    10,000 "gift" from parents to child - Taxes? 14th Nov 12 at 8:58 AM
    Hi, Im posting on behalf of a friend.

    He is looking to buy his first house soon and has saved up aproximatly 8,000 deposit, the house he wants is around the 100,000 mark and his parents ahve decided they want to help him out by giving him an early "inheritance" cheque for 10,000 to go towards his deposit. Basicly, they want to know exactly how this would work in terms of tax etc? does any apply? if so, is there a way to avoid it? Also, how would the banks look upon the "gift" in terms of offering a mortgague?

    Regards
    Paul
Page 1
  • ColdIron
    • #2
    • 14th Nov 12, 9:11 AM
    • #2
    • 14th Nov 12, 9:11 AM
    Generally parents can give money to their children without informing HMRC, there is no Gift Tax in the UK
    However if they die within seven years the gift will be taken into account for Inheritance Tax
    http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm
    Once your friend receives the money it is theirs and should not concern the bank
  • pmartin86
    • #3
    • 14th Nov 12, 9:16 AM
    • #3
    • 14th Nov 12, 9:16 AM
    Excellent, thank you very much, I'm not sure, but I don't beleive his parents estate would come up to the 325k mark anyway. (House in same area as my on mum and probably around the 120-150k mark) and I know their not living a life of luxury, so unless they have a large stash hidden away somewhere I suspect he should be safe!

    Regards
    Paul
  • le loup
    • #4
    • 14th Nov 12, 9:29 AM
    • #4
    • 14th Nov 12, 9:29 AM
    If the parents ever need State help, watch out for "deprivation of assets".
    • kidmugsy
    • By kidmugsy 14th Nov 12, 11:21 AM
    • 7,110 Posts
    • 4,387 Thanks
    kidmugsy
    • #5
    • 14th Nov 12, 11:21 AM
    • #5
    • 14th Nov 12, 11:21 AM
    Hi, Im posting on behalf of a friend.

    He is looking to buy his first house soon and has saved up aproximatly 8,000 deposit, the house he wants is around the 100,000 mark and his parents ahve decided they want to help him out by giving him an early "inheritance" cheque for 10,000 to go towards his deposit. Basicly, they want to know exactly how this would work in terms of tax etc? does any apply? if so, is there a way to avoid it? Also, how would the banks look upon the "gift" in terms of offering a mortgague?

    Regards
    Paul
    Originally posted by pmartin86
    The parents should each gift him 5000, which uses up this tax year's 3k allowance exempt from IHT and 2k of last year's allowance. They should each write him a letter to that effect, and he and they should keep copies. Then even if they have a big win on the lottery or the premium bonds, those gifts are permanently free of IHT.
    • kidmugsy
    • By kidmugsy 14th Nov 12, 11:28 AM
    • 7,110 Posts
    • 4,387 Thanks
    kidmugsy
    • #6
    • 14th Nov 12, 11:28 AM
    • #6
    • 14th Nov 12, 11:28 AM
    Oh, and the banks might ask for a letter from the parents to confirm that the money is a gift and not a loan.
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