transferring money to parents or vice versa

hariyoung

Hi,
This might be a relatively straightforward question, but have not found a clear answer yet.
Assume I remortgages my property and took out an extra £100,000 from it. Because of this financial crisis I transferred 50,000 to my fathers account, just for safe keeping (to remain below government compensation limit if bank fails).
Is there anything wrong with this?
Secondly does it matter if my father transferred it back or not?
Thirdly what if the initial £100,000 was not borrowed and was all my personal money of which I transferred £50,000?
Appreciate a reply
thanks

dzug1

There's nothing illegal about it but a couple of possible snags:

Legally you will be regarded as having gifted your father the £50K - which means that there will be IHT implications when he dies as it's his asset.

Should you die first (within 7 years) then there are also IHT implications - but less severe as you would have had the money anyway.

If he give it back it might be possible to pass it off as a loan - but at worse there are now two gifts to complicate the IHT picture, one each way.

Another snag - he can refuse to give it back.

The source of the money is irrelevant.

Things would be a whole lot easier if you had opened another bank account yourself. Not having done this makes it more difficult to claim it was a loan, not a gift.

greyteam1959

The bank would also report the movement of any amount over £5000...