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  • FIRST POST
    jessmjc
    Cash Gift from parents - Do I need to pay income tax on this gift ?
    • #1
    • 13th Aug 05, 7:46 PM
    Cash Gift from parents - Do I need to pay income tax on this gift ? 13th Aug 05 at 7:46 PM
    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
Page 1
  • reddevilled
    • #2
    • 13th Aug 05, 8:16 PM
    • #2
    • 13th Aug 05, 8:16 PM
    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.
    • grumbler
    • By grumbler 13th Aug 05, 9:40 PM
    • 50,832 Posts
    • 21,431 Thanks
    grumbler
    • #3
    • 13th Aug 05, 9:40 PM
    • #3
    • 13th Aug 05, 9:40 PM
    However, as this is a gift to myself, Should I be paying income tax on this money ?
    by jessmjc
    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.

    .withdrawal, NOT withdrawel ..bear with me, NOT bare with me
    .definitely, NOT definately ......separate, NOT seperate
    should have, NOT should of
    .....guaranteed, NOT guarenteed
  • DaveK
    • #4
    • 13th Aug 05, 11:34 PM
    • #4
    • 13th Aug 05, 11:34 PM
    You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !
    • sarahlouise210
    • By sarahlouise210 16th Aug 05, 2:34 AM
    • 3,163 Posts
    • 3,614 Thanks
    sarahlouise210
    • #5
    • 16th Aug 05, 2:34 AM
    • #5
    • 16th Aug 05, 2:34 AM
    You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !
    by DaveK
    Ditto !!! Enjoy !!
    I have had brain surgery - sorry if I am a little confused sometimes
    • surfcat
    • By surfcat 16th Aug 05, 11:20 AM
    • 709 Posts
    • 369 Thanks
    surfcat
    • #6
    • 16th Aug 05, 11:20 AM
    • #6
    • 16th Aug 05, 11:20 AM
    Does this not fall outside the limits of gifts to me made to relatives?
  • martinpike
    • #7
    • 16th Aug 05, 12:27 PM
    • #7
    • 16th Aug 05, 12:27 PM
    Are you female and single?

    ;-)
  • klondyke
    • #8
    • 16th Aug 05, 12:35 PM
    • #8
    • 16th Aug 05, 12:35 PM
    Does this not fall outside the limits of gifts to me made to relatives?
    by surfcat
    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
  • sneekymum
    • #9
    • 20th Aug 05, 2:44 PM
    • #9
    • 20th Aug 05, 2:44 PM

    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.

    by klondyke
    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
  • Garv0r
    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!
  • krs_sn
    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?
    • dzug1
    • By dzug1 23rd May 10, 1:31 PM
    • 13,340 Posts
    • 6,107 Thanks
    dzug1
    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!
    Originally posted by Garv0r
    It's NEVER subject to INCOME tax because it's NOT income.
    • dzug1
    • By dzug1 23rd May 10, 1:36 PM
    • 13,340 Posts
    • 6,107 Thanks
    dzug1
    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?
    Originally posted by krs_sn
    £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
  • Mahmood Reza
    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.
    • glider3560
    • By glider3560 22nd Aug 10, 5:33 PM
    • 2,905 Posts
    • 1,715 Thanks
    glider3560
    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.
    Originally posted by Mahmood Reza
    Why resurrect a three month old thread?

  • Mahmood Reza
    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?
    • John_Pierpoint
    • By John_Pierpoint 23rd Aug 10, 5:32 PM
    • 8,218 Posts
    • 7,375 Thanks
    John_Pierpoint
    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.
    • supermonkey
    • By supermonkey 24th Aug 10, 10:50 PM
    • 717 Posts
    • 116 Thanks
    supermonkey
    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
    Originally posted by jessmjc

    Can we swap parents?
    • Sparx
    • By Sparx 25th Aug 10, 12:01 AM
    • 565 Posts
    • 306 Thanks
    Sparx
    Lucky, lucky guy (or girl?)..
  • mijana
    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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