Self employed tax credits / gift of income

joyfull

I already posted this on the 'benefits' section of this website & have received no answers. Apologies for duplication but I need this information - Joyfull

I'm self employed, working 30hrs / week with very low income & receiving maximum working tax credits.

My mother gifts me £2000 a year to help out.

I understand that a maximum of £3000 per year can be received as a gift which does not need to included as income on my tax return form. (I phoned the revenue peeps several times to check this out). I therefore do not declare this on my tax return form.

Can someone please confirm that this is correct?

Regarding tax credits.
I use the figures arrived at on my tax return form (ie. not including the £2000 gift) when applying for my tax credits. I'm now concerned as a tax credit advisor has just told me I should be declaring this gift as income when applying for tax credits.

Can someone please advise is this is correct. When is a gift counted as a gift or income? Confused!

Thanks in advance for your help.

fengirl_2

I cant help with the tax credits question, but the answer you have been given in relation to tax is rubbish.
There is no gift tax in the UK - you can receive any amount of money as gifts and it is not subject to income or any other sort of tax. If it was, HMRC would be chasing thousands of people with rich relations!
Your parents can give away up to £3000 pa without it counting towards their IHT limit - they should take advice on this, but it dose not affect you.

ceeforcat

£3000 or £3000000 – it does not ever need to go on your tax return. Your mother can give you whatever she likes – the only implications are for her estate and any potential liability to inheritance tax. She can give up to £3000 per annum (an additional £3000 if she did not do so last year) without implication. In addition she can give away any amount so long as the gifts are regular and do not diminish her lifestyle.

There is no way in the world that I can see how this can be treated as income for tax credit purposes. Any interest you may receive on this money over £300 will of course have to be declared.

Have a look at this page!

http://www.hmrc.gov.uk/taxcredits/other-income.htm

joyfull

Thank you fengirl and ceeforcat.

The information is most helpful..I now feel clear & confident to keep my gift as a gift.

Sorted!