Gift of Money - How is it declared?

mapleoak

Apologies if this has been covered elsewhere. My sister-in-law wants to give us £10000. I am a higher rate taxpayer (only just mind) and my wife is still in the 22% tax bracket. Do I have to declare it to the Inland Revenue and if so, by what means? Would it be better in my name or my wife's for that matter? Will I have to pay tax on it or just on any income in interest, as we intend to invest it.

Sorry for all the questions, but I don't want to get into any bother.

Chrismaths

You don't have to declare it - it's only if she dies within 7 years of the gift that it then has to be declared. As it is a gift, there is no tax on the capital. As it will then be your money, You will have to pay tax on any interest you get from it. If you haven't used your ISA allowances this year, you should consider that (check the Savings and Investments forum), otherwise, your wife would pay a lower rate of tax on interest.

Robert_Sterling

A gift is a gift. No tax is due on it. However for Inheritance Tax Purposes a gift is a PET i.e. A Potentially Exempt Transfer. It becomes exempt if the donor survives for seven years after the gift is made.