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Cash Gift from parents - Do I need to pay income tax on this gift ?
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# 1
jessmjc
Old 13-08-2005, 7:46 PM
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Question Cash Gift from parents - Do I need to pay income tax on this gift ?

I am about to receive a cash gift from my parents of 100,000.

From an IHT perspective I fully understand that as long as they live 7 years this cash will not form part of their estate and will therefore be free from IHT.

However, as this is a gift to myself, Should I be paying income tax on this money ?

I fully understand I will have to pay tax on the savings that this cash generates but the income tax situation is a little confusing, any help/advice appreciated.

regards

Jessmjc
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# 2
reddevilled
Old 13-08-2005, 8:16 PM
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No you will not have to pay income tax on the gift. You would only fall into problems if you used the money to buy an item which your parents then used (eg a house). Then you may be caught by the pre-owned assets legislation.
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# 3
grumbler
Old 13-08-2005, 9:40 PM
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Quote:
Originally Posted by jessmjc
However, as this is a gift to myself, Should I be paying income tax on this money ?
NO. Otherwise your parents could employ you, pay the money as salary and avoid inheritance tax
We are born naked, wet and hungry...Then things get worse.

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# 4
DaveK
Old 13-08-2005, 11:34 PM
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You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !
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# 5
sarahlouise210
Old 16-08-2005, 2:34 AM
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Quote:
Originally Posted by DaveK
You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !
Ditto !!! Enjoy !!
I have had brain surgery - sorry if I am a little confused sometimes
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# 6
surfcat
Old 16-08-2005, 11:20 AM
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Does this not fall outside the limits of gifts to me made to relatives?
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# 7
martinpike
Old 16-08-2005, 12:27 PM
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Are you female and single?

;-)
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# 8
klondyke
Old 16-08-2005, 12:35 PM
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Quote:
Originally Posted by surfcat
Does this not fall outside the limits of gifts to me made to relatives?
It would be a Potentially Exempt Transfer (PET) ie whichever parent making the gift dies within 7 years, then it may be liable for IHT depending on value of total estate. The first 3000 is free from IHT anyway (if no other gifts have been made in this tax year) [6000 if none made last year].

Whichever parent? Each parent has the same IHT allowance, so if they can each make half the gift to you (eg cheque in their own name) this reduces the potential liability in the event of one dying within 7 years.

I'm sure someone will give the link to Inland Revenue info for full rules.

Main thing is to keep a transparent paper trail in case they have questions later. It could help to make a separate gifts of the first 3000 [or 6000] from each parent so that these will be totally exempt.


hth
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# 9
sneekymum
Old 20-08-2005, 2:44 PM
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Quote:
Originally Posted by klondyke

Main thing is to keep a transparent paper trail in case they have questions later. It could help to make a separate gifts of the first 3000 [or 6000] from each parent so that these will be totally exempt.

My Mother keeps a "PET Register" of home-made gift certificates declaring the date of the gift, the amount, and who to - she signs these and updates a list which she signs at the bottom leaving no space for insertions. The whole lot then lives in its own lavish folder in plastic sleeves along with photocopies of the relevant bank statements.

Its only those whose paperwork is in a mess that don't last the seven years...
Such records need to be kept for much longer than that in any case.
still raining
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# 10
Garv0r
Old 03-09-2005, 10:14 PM
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I'm sure there is an income tax rule that might come in to play here, which arose as a result of fathers gifting their ex wives substainence money.

If "it isn't in your usual lifestyle" to receive such large sums, then I believe it might be subject to Income Tax. I'm guessing it's an attempt to stop money laundering? Again, knowing me I'm completely wrong!
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# 11
krs_sn
Old 23-05-2010, 12:24 PM
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I have a query...I am getting married in July...My future father in Law who lives in Germany wants to make a cash gift of 5000 into my account towards organizing the wedding in the UK...Do I have to pay tax on this amount? what are the implications?
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# 12
dzug1
Old 23-05-2010, 1:31 PM
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Quote:
Originally Posted by Garv0r View Post
I'm sure there is an income tax rule that might come in to play here, which arose as a result of fathers gifting their ex wives substainence money.

If "it isn't in your usual lifestyle" to receive such large sums, then I believe it might be subject to Income Tax. I'm guessing it's an attempt to stop money laundering? Again, knowing me I'm completely wrong!
It's NEVER subject to INCOME tax because it's NOT income.
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# 13
dzug1
Old 23-05-2010, 1:36 PM
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Quote:
Originally Posted by krs_sn View Post
I have a query...I am getting married in July...My future father in Law who lives in Germany wants to make a cash gift of 5000 into my account towards organizing the wedding in the UK...Do I have to pay tax on this amount? what are the implications?
5000 on marriage or anticipation of marriage is exempt from UK IHT - so no tax for you

There may be a German tax implication - I've no idea
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# 14
Mahmood Reza
Old 22-08-2010, 3:58 PM
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Individuals are not normally liable to tax on the receiving of gifts (cash, shares, houses etc), whether tax becomes an issue depends on how those gifts (assest) are used.

If those assets are used to generate income, eg bank interest, dividends, business profits then that income is taxable . If you sell or give away any of those assets that are classified as taxable then any (capital) gains will be taxable - cash is not taxable.

Just to mention one point about Inheritance Tax, it is normally payable by an individual where the gift is made to them within 7 years of the donors death and they have agreed to pay the tax due.
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# 15
glider3560
Old 22-08-2010, 5:33 PM
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Quote:
Originally Posted by Mahmood Reza View Post
Individuals are not normally liable to tax on the receiving of gifts (cash, shares, houses etc), whether tax becomes an issue depends on how those gifts (assest) are used.

If those assets are used to generate income, eg bank interest, dividends, business profits then that income is taxable . If you sell or give away any of those assets that are classified as taxable then any (capital) gains will be taxable - cash is not taxable.

Just to mention one point about Inheritance Tax, it is normally payable by an individual where the gift is made to them within 7 years of the donors death and they have agreed to pay the tax due.
Why resurrect a three month old thread?

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# 16
Mahmood Reza
Old 23-08-2010, 6:54 AM
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Not quite sure what point you are making but apologies if it is not to your liking - maybe I have not got to grips fully with forum etiquette, I am a new member. I was not aware that there was a 3 month old thread, questions and comments were put and I wanted to contribute an answer. If this ussue has been previosuly dealt with (as you suggest) then why are people asking the questions thay have?
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# 17
John_Pierpoint
Old 23-08-2010, 5:32 PM
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Just a final thought - my late grandmother tried to give everything away before she died and in her will; she must have never realised that there was a chunk left to the tax man and that he was first in line and nobody got their shares until the tax man had been given his dues.
It caused certain conflicts within the family as to how the tax would be paid.
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# 18
supermonkey
Old 24-08-2010, 10:50 PM
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Quote:
Originally Posted by jessmjc View Post
I am about to receive a cash gift from my parents of 100,000.

From an IHT perspective I fully understand that as long as they live 7 years this cash will not form part of their estate and will therefore be free from IHT.

However, as this is a gift to myself, Should I be paying income tax on this money ?

I fully understand I will have to pay tax on the savings that this cash generates but the income tax situation is a little confusing, any help/advice appreciated.

regards

Jessmjc

Can we swap parents?
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# 19
Sparx
Old 25-08-2010, 12:01 AM
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Lucky, lucky guy (or girl?)..
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# 20
mijana
Old 09-03-2011, 12:24 AM
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my father is very ill and wants to sort things out before it is too late. He just sold his house and wants to give money to me and my siblings so we could buy houses for us. He lives abroad and UK IHT should not apply here. Will I have to pay any tax here?
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