Do you pay tax on cash gifts?

rainbow143

Reading a reply on another thread it was suggested that you can give away as much money as you like and the recipient will not have to pay tax - there is no tax on gifts in the UK.

Is this correct?

I have been trying to find out how much money you can receive as a gift without paying tax on it.
If my father decided to give me £20000 as a gift, what would the consequences be to us both?
He does not have enough assets to be affected by inheritance tax.

Any advice would be appreciated

fengirl_2

Yes, there is no gift tax in the UK. The recipient of a gift never pays tax on it.
If your father's estate is below the IHT threshold (including the potential £20k gift), then the gift will not attract IHT if he dies within 7 yrs of the gift.

Pumpkinface_2

If your father gave you £20k and then unfortunately passed away within seven years, the £20k (or part of it) would be included in the calculation of IHT on your father's estate. If you are certain that your father's estate would be below IHT thresholds then there would be no tax impact of the gift, now or in the future.

rainbow143

Thanks for the replies so far, but am a bit confused. I was under the impression that if you entered the lottery with a group of people, you were encouraged to make a syndicate as otherwise you wouldn't be able to share the money out. What's to stop the named winner giving the others in the group cash gifts? They would be tax free surely?
I'm confused!!

Pumpkinface_2

rainbow143 wrote: »

Thanks for the replies so far, but am a bit confused. I was under the impression that if you entered the lottery with a group of people, you were encouraged to make a syndicate as otherwise you wouldn't be able to share the money out. What's to stop the named winner giving the others in the group cash gifts? They would be tax free surely?
I'm confused!!

Deleted as misleading.

fengirl_2

Previous answer is a bit misleading. No gifts are taxable at the time they are given - either on the donor or the donee.
The reason for agreements in Lottery syndicates is that if the syndicate was just in one person's name and they won, say £1 million, that £1million would be their money. If they shared out the prize between the others in the syndaicate and then died withn 7 years, the £1million would form part of their estate and the gifts would count as disposals of capital and potentially be liable to IHT. The beneficiaries of that person's estate would then be paying IHT on money which had been shared out years before.
A correctly drawn agreement would state that any Lottery winnings in that syndicate were legally those of all the people in the syndicate.

dzug1

rainbow143 wrote: »

Thanks for the replies so far, but am a bit confused. I was under the impression that if you entered the lottery with a group of people, you were encouraged to make a syndicate as otherwise you wouldn't be able to share the money out. What's to stop the named winner giving the others in the group cash gifts? They would be tax free surely?
I'm confused!!

No - not wouldn't be able to. Wouldn't have to. The person who bought the ticket could otherwise keep all the winnings.