Advice on £20,000 gift please

Hi. After my Father passed away last year, my Mother moved down-sized into a smaller house, and generously gave us (myself, wife and son) a one-off gift of £20,000, in accordance to my Father's wishes. In order to keep my Mum's finances simple, I immediately paid the cash into my current account. Unfortunately, I am a bit of a tax novice, so I don't really know where to begin dealing with something like this from a tax POV.

I have several questions:
  • Firstly, what tax(es) apply to a gift like this?
  • Is there a way that my Mother could (could have) give us a gift like this tax free / reduced tax?
  • If I give the money back, and define it as a "loan", will this have any tax implications?
Our basic tax situation is that I am salaried (~£35K / year), but my wife has no significant income of her own. Ideally, we will use the cash to pay off part of our £50K mortgage.

Many thanks.

Comments

  • jem16
    jem16 Posts: 19,544 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    There is no gift tax in the UK - your mother is perfectly able to give you a gift of £20k with no tax implications to yourself or herself.

    The only thing that might enter into it is Inheritance Tax liability on your mother's estate if she dies within 7 years of making this gift and if she is over the IHT threshold in the first place.
  • kramii
    kramii Posts: 13 Forumite
    Wow, thanks. That really is helpful - and quite a weight off my mind.
  • hethmar
    hethmar Posts: 10,678 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker Car Insurance Carver!
    Dont say its a loan - causes more complications for your mum. Just enjoy the money like she and your dad wanted - no need to declare it.
  • dzug1
    dzug1 Posts: 13,535 Forumite
    10,000 Posts Combo Breaker
    kramii wrote: »
    Hi. After my Father passed away last year, my Mother moved down-sized into a smaller house, and generously gave us (myself, wife and son) a one-off gift of £20,000, in accordance to my Father's wishes.

    How was this wish expressed? If it was in a will then it isn't a gift at all, but a 'proper inheritance'.
  • kramii
    kramii Posts: 13 Forumite
    dzug1 wrote: »
    How was this wish expressed? If it was in a will then it isn't a gift at all, but a 'proper inheritance'.

    Thanks for raising this: it isn't something that would have occured to me.

    Now, I don't think it was in his will, but I'm not absolutely certain. Truth be told, my mother may just have said that it was my Father's wish so that we couldn't refuse the cash (I can't help feeling that he and Mum worked hard for it all their lives, so Mum should be the one to benefit from it). That said, it is the kind of thing he would have wanted; my Father was always generous towards us. So, it is possible that there is something about this in his will, but unlikely.

    I'll have to find out (without offending my Mother).
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 349.8K Banking & Borrowing
  • 252.6K Reduce Debt & Boost Income
  • 453K Spending & Discounts
  • 242.8K Work, Benefits & Business
  • 619.5K Mortgages, Homes & Bills
  • 176.4K Life & Family
  • 255.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.