20k gift - Tax and savings help!

Wirley

My parents would like to give me help towards a deposit on a house. Where is a good place to save it until I'm ready to buy and can anyone tell what the tax implications are?

Reaper

If your parents were to die within 7 years of making the gift and if their total assets (inc property) were to exceed £325,000 then you might have to pay inheritance tax on the money.

Apart from that the only tax implications are the tax you pay on the interest earned. If you are a non-tax payer be sure to say you want the money paid free of tax. I not look at cash ISAs for some of the money, and again after April when you are allowed to add the next year's allowance to it.

As for the best place look at the best buy tables or savings article on this site for instant access acounts or fixed term/fixed interest accounts depending how long until you need the money.

D1zzy

Reaper wrote: »

If your parents were to die within 7 years of making the gift and if their total assets (inc property) were to exceed £325,000 then you might have to pay inheritance tax on the money.
.

Don't you get double allowance (£650,000) now, if both die?

Reaper

To be honest I don't know the answer. I have been fortunate enough not to have had to deal with it. What if 1 parent dies but the gift came from a bank account in their name only rather than a joint account? Also I know there are a bunch of exemptions such as £3000 gifts which can be carried forward for a year.

If anybody feels like reading up on it (which doesn't apeal much to me) I suggest starting with the IR web site:
http://www.hmrc.gov.uk/inheritancetax/understand/index.htm

GtiTory

if you buy a house, they can gift the money to you, therefore being tax free,
also theres something called the family equity scheme, so they have their names on your property deeds, if they put in their will for you to recieve the equity from your house... thats also tax free.
but for future times, they could stick it in a fixed rate isa, britannia has one at 5% interest rate, after tax, you get 800 quid a year interest. but if you take the money out they charge you 2% of your interest, so you only get 3%

D1zzy

GtiTory wrote: »

if you buy a house, they can gift the money to you, therefore being tax free,

They can give you as much as they like and you can do with it whatever you wish -tax free.
Its only an issue if they both die within 7 years; then the value of their gift has to be included in their estate for IHT calculation purposes. It is on a sliding scale though- the longer they live the less has to be included, and you don't have to pay the tax, the estate does and then, only if the total estate is more than the exemption limit

but for future times, they could stick it in a fixed rate isa, britannia has one at 5% interest rate, after tax, you get 800 quid a year interest. but if you take the money out they charge you 2% of your interest, so you only get 3%

Isas are Tax free