Winning the lottery, and families, and the taxman

Hootie19

Bit of a rhetorical question, as judging by the luck we've had since the lottery started, we're not likely to face the issue .

However . . . I buy our lottery tickets online, and the account is in my sole name.

*IF* I ever won (and I'm talking a big win, not a couple of hundred pounds) what would the taxman have to say about me giving/sharing the money with my husband and/or children? Would it be treated as taxable income for them, or is this kind of sharing acceptable?

Or should we be forming a syndicate? Would that take away any tax implications?

slummymummyof3

I think its fine between spouses but it would involve capital gains tax to children/friends as you can only 'gift' around £7k per annum per child - please correct me if I'm wrong. I keep trying to convince my parents that they should start gifting to us but they tell me they are skiing with it instead (spending the kids inheritance!!)

McKneff

I think the syndicate agreement is the way to go.

There is a template form on the Camelot website.

That the legal protection way to do it.

seafarers_wife

its bad that ive already thought of this and sorted it so that if the issue should ever occur to us (not that its likely lol) just to make the most of the money. it is considered taxable income however trusts and things can be set up to ringfence the money to avoid big tax bills.

we play the lotto online and have a dd set up for the normal lotto on a saturday and do lump deposits to play euro millions for a few weeks running. the account is set up in oh name and we use his bank account to fund it and pay any winnings into. because he is away so much he doesnt pay tax so any lotto winnings are tax free, in reality any winnings would be ours and not his, thank heavens for power of attorney

mackemdave

The winnings are tax free but any interest earned on the winnings is taxable....If you gift any money to kids or other members of your family then the7 yr rule applies that death duty would be payable by the estate...So if you won £4m and gave your two kids £1m each then if you died within 7 yrs there would be 40% of £2m to pay....If you set up as a syndicate with your hubby and two kids the £4m shared amongst you then this would reduce any possible death duty and also the tax on interest would be set against 4 people

donquine

Hootie19 wrote: »

Bit of a rhetorical question, as judging by the luck we've had since the lottery started, we're not likely to face the issue .

However . . . I buy our lottery tickets online, and the account is in my sole name.

*IF* I ever won (and I'm talking a big win, not a couple of hundred pounds) what would the taxman have to say about me giving/sharing the money with my husband and/or children? Would it be treated as taxable income for them, or is this kind of sharing acceptable?

Or should we be forming a syndicate? Would that take away any tax implications?

Lottery winnings are exempt from tax. Interest on your winnings however would be taxable.

Gifts to your husband would never be taxable income.

Gifts to your children would also not be taxable income. However, if you died within 7 years of making those gifts, inheritance tax would come into play.

You can give a certain amount of money away each year without it coming within inheritance tax rules (there are additional exemptions for certain circumstances, e.g. gifts on marriage), so there's that to consider as well.

If you played as a syndicate, you would all receive money directly, it wouldn't be a gift from anyone, therefore from an inheritance tax point of view, your children might be better off.

peachyprice

Can you syndicate children in if they are under 16?

Hootie19

probably not, peachyprice. But my "baby" is almost 19, so not an issue lol