Putting savings in mum's name

xxtokerxx

I thought you could only give £3,000 a year as a gift, any more than this will be taxed, and if you mother was to unfortunately pass away in this time you will be liable for IHT on this amount (Above £3,000) as well.

Primrose

Can the OP offer it to his mother as an interest free loan for a one year period? But I'm sure to avoid any legal issues if his mother died, his mother would specifically need to mention this in her will so that it could be repaid. I would class this as tax avoidance rather than tax evasion as there's no law that says you can't make an interest free loan to relatives but I would certainly check first that having £70,000 in savings wouldn't cause issues if his mother was either on benefits or receipt of the interest due would put her into a taxpaying category. Also £70,000 is above the safety compensation limit for one person if it's in a single account, as somebody else has already pointed out.

alanq

As well as the potential for the cash to affect mother's benefits while she has it, there is also potential for an effect afterwards. How would it look if she applied for a means tested benefit and was seen to have recently "given away" £70K of "her" money?

If I understand correctly "gifts" beyond a low allowance have to be declared to the tax man because of the potential for inheritance tax liability. So your "gift" to your mother and hers to you would have to be declared and would arouse interest.

joemardo1

What about if a person gave the money to their live-in partner would that still be considered tax evasion I wonder?

Joe

itsallagame_2

If you really want to go ahead with this, the best way, as stated before, is in an interest free loan. Put it in writing, nothing fancy, and keep a copy each.

noh

itsallagame wrote: »

If you really want to go ahead with this, the best way, as stated before, is in an interest free loan. Put it in writing, nothing fancy, and keep a copy each.

How does that acheive the OPs aim of maximising the interest on his £70000?
All it does is reduce it to zero!

If you are proposing that his mother gifts the interest earned back after the year then that is still tax evasion. It's the intent that matters.

alanq

If I understand correctly "gifts" beyond a low allowance have to be declared to the tax man because of the potential for inheritance tax liability. So your "gift" to your mother and hers to you would have to be declared and would arouse interest.

Gifts of any amount do not have to be declared when they are made.
They form part of the donors estate should they die within 7 years of making the gift and as such would have to be declared on the IHT form if the estate exceeded the IHT limit

isofa

xxtokerxx wrote: »

I thought you could only give £3,000 a year as a gift, any more than this will be taxed, and if you mother was to unfortunately pass away in this time you will be liable for IHT on this amount (Above £3,000) as well.

You can give gifts as much as you like away, provided the donor lives for 7 years after the date of the gift, no IHT will ever be due.

Also there are other rules and examples. E.g. if you are wealthy and give your kids 20K a month living expenses (we can all dream!), and as long as you've always done this, and continue to do so, then that wouldn't be liable for IHT either, regardless of when the donor died.

RayWolfe

isofa wrote: »

E.g. if you are wealthy and give your kids 20K a month living expenses (we can all dream!), and as long as you've always done this, and continue to do so, then that wouldn't be liable for IHT either, regardless of when the donor died.

Not quite.
It must come from income and must not reduce your capital.

itsallagame_2

noh wrote: »

How does that acheive the OPs aim of maximising the interest on his £70000?
All it does is reduce it to zero!

If you are proposing that his mother gifts the interest earned back after the year then that is still tax evasion. It's the intent that matters.

alanq


Gifts of any amount do not have to be declared when they are made.
They form part of the donors estate should they die within 7 years of making the gift and as such would have to be declared on the IHT form if the estate exceeded the IHT limit

Oh, you are making it hard for the fellow!
Is she not allowed to spend the money? It’s a LOAN !!!!!!, perfectly legal.
Interest gifted back would be ‘spent’ from account dribs and drabs, nothing hard about that. You’re really getting into tricky situation if she dies/ falls ill, if it’s a gift, not worth it.
Tax evasion, prove it? He has the paperwork.
What’s it for? , Building work, gambling debts, whatever, as long as it is documented.
Tax evasion? Cash in hand, self employed, accounting, cheap fags, buying cheap booze, please stop being dramatic, we’re all adults here.
Like I said, A INTEREST FREE LOAN IS PERFECTLY LEGAL


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jem16

itsallagame wrote: »

Like I said, A INTEREST FREE LOAN IS PERFECTLY LEGAL

He has no intention of lending the money to his mother. He wants her to put HIS money in HER bank account so that he can avoid paying tax. He still wants to have the money and wants the interest.