Tax Implications of a gifted Deposit...

wesb24

Hi,

My dad who is generously gifting my gf and I a deposit for the house asked if there are any tax implications on doing so?! All I can would be inheritance tax if he passed away. Is it just this or are there other areas to consider?

Thanks in advance!

phlash

Its a gift, and there are tax issues, but they may not affect you. Inheritance tax doesn't affect the majority of people, as the threshold per person is £325k, which means for a parental couple it is £650k.

It will be a PET (Potentially Exempt Transfer). If your Dad didn't gift anything this year or last year, you could use the £3,000 annual exemption so that £6k of it is exempt from inheritance tax.

Anything above the annual exemption will be a PET. If your Dad is still alive 7 years later the 'potential' exemption will become true, and the gift will be deemed to have been exempt. Otherwise if it was within 7 years (subject to taper relief) and your Dad's estate is greater than the threshold above, it would be chargeable to inheritance tax.