maximum gift from parents for a deposit?

nurse_nina

helllllp! have brought a house, and need to put down a deposit of 31k, i have this money in various savings accounts and isa's but only about £20k of it is instantly accessible. my parents have very kindly offered to give me and my partner a gift of £10k for house/doing work/wedding etc so my plan was to use this coupled with my £20k to make up the deposit, but i've heard that parents can only give their children £3000 a year as a 'gift' to avoid money laundering and inheritance tax fraud... is this true?? it seems ridiculous that they can't decide to do with their own money!!!! is there a way around this or is it even true? advice appreciated, thanks.

Mikeyorks

nurse_nina wrote: »

is this true??

No.

They can give you as much as they want. But it may be added back to their estate for IHT purposes if they die within 7 years. The £3k is the accepted limit for gifts which don't get added back onto the estate for IHT valuation.

alanq

Wedding gifts from parent to child up to £5000 are IHT exempt. If each parent donates that's £10000 without problems.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

nurse_nina

whats this 7 year rule all about?? what a strange rule, i'm hoping they will still be around in 7 years!! but why does it make a difference if they're not? can't it be seen as a loan and i can pay them back when i have access to my funds?

Lokolo

nurse_nina wrote: »

whats this 7 year rule all about?? what a strange rule, i'm hoping they will still be around in 7 years!! but why does it make a difference if they're not? can't it be seen as a loan and i can pay them back when i have access to my funds?

It's to stop being trying to evade inheritence tax. So if someone is getting ill and thinks they're about the pop it, they give all their assets to their kids, so they don't pay the inheritence tax when they die. This rule stops it.

getmore4less

nurse_nina wrote: »

whats this 7 year rule all about?? what a strange rule, i'm hoping they will still be around in 7 years!! but why does it make a difference if they're not? can't it be seen as a loan and i can pay them back when i have access to my funds?

If it is a loan then you would need to declare that on the morgage application.

Stick to it being a gift.


You need to read up about estate planning inheritance tax, it is a good idea to understand the basics it can catch up with you and you need it for doing your will anyway.

For the 7 year rule look up potentialy exempt transfers known as PETs.

nurse_nina

so basically all the fraudsters in the world are spoiling it for me! great! don't you just love it!! bloody dishonest people ruining it for the rest of us! thanks for the advice though.

hugheskevi

so basically all the fraudsters in the world are spoiling it for me! great! don't you just love it!! bloody dishonest people ruining it for the rest of us! thanks for the advice though.

They are not spoiling anything - your parents could give you £1m toward the house purchase if they wanted to, there just may be tax consequences in the event of death.

Given that isn't a concern here it shouldn't make any difference to your actions. Just take the money from your parents as a gifted deposit.

can't it be seen as a loan and i can pay them back when i have access to my funds?

The lending bank are likely to want to see signed papers from your parents that this is a gift when you come to provide proof of deposit.

Any hint that it is a loan could be problematic.

Mikeyorks

nurse_nina wrote: »

so basically all the fraudsters in the world are spoiling it for me! .

No. They can give you the £10k unconditionally.

But it may be added back (or partially) to the value of their Estate if they don't survive beyond 7 years. But any IHT payable would be by the Estate - not you.

xrjtg

What happens if the entire estate is gifted away leaving a liability that cannot be met?

Reaper

The money would be clawed back from those it was gifted to.