Tax on gift?

gnimia

Hi all, this isnt so much about cutting tax as knowing where I stand, but I would really appreciate any advice!

I am an FTB, and my uncle has insisted on giving me a fairly large wodge of money towards my deposit. I have gratefully accepted, though i do feel slightly uncomofatble about it. We have talked about implications of nursing home/deprivation of capital etc, and he is sure... so I kind of can't turn it down. He has no kids of his own, no other neices/nephews bar my Sis.

My main question is that can this be qualifed as a gift under the 7 year inheritance tax thing? (both sis and I are in his will), or does it only count for immediate family, could there be other rules that disallow it?

If this isnt possible, I guess I will have to pay standard income tax on it, and do a self-evalaution at the end of the year... would that be right?

I suspect I will have to get formal advice, but any suggestions would be very helpful indeed.

00ec25

tax on gifts is a question which is asked nearly every day

There is no Income Tax due on gifts in the UK - forget about self assessment on the money he pays you, its not necessary

You seem to have partially understood the Inheritance Tax (IHT) rules... yes this qualifies as a Potentially Exempt Transfer (PET)

Under a PET your Uncle can give money to any Tom, !!!!!! or Harry (or me ), they do not have to be related to each other .

once the money has been received by you, then provided Uncle lives for 7 years after that date, the cash will be entirely free of any IHT

if Uncle dies within 7 years of giving the cash, and assuming his estate is actually liable for IHT at all (ie >£325,000 in total incl this gift to you), then his Estate (not you) will be laible for tax the gift. I reiterate - his estate will have to pay, even if you are a benificary under his will then you will not have to return any money he gave you, his estate will have to pay the bill (if there is a bill) and the amount due will be reduced if he lives for between 3 - 7 years after the gift


The deprivation of assets is however another thing entirely and Uncle needs to be careful over that matter (see this thread from yesterday)

gnimia

Thanks 00ec - really helpful. Sorry its such a regular question I had done a search, honest!