being given £10k...

genfink

....lucky me!:j

However I am not experienced in matters of money and tax and so I'm looking for some MSE help, I know you guys are the best in the business!

My parents want to give me £10k, and we would like to know the most tax efficient way of getting it to me?

I don't need it instantly, so if it would be better for them to stash it into an account somewhere until I need it we could do that?
This makes me wonder that if the time comes that I would like them to put it towards something big, like a house deposit or a year's tuition fees (I'm at uni part time) then does that still count as giving it to me specifically as they are paying something on my behalf?

Failing that and if they really wanted me to take possession of it how do we go about it? I understand (in the loosest sense of the word) that Mum can "gift" me £3000 a year (but I don't really know what gifting means?) and so give me the money over 4 yrs, so that might be the best way of doing it?

I would like to know if that would impact my income tax though, would I have to fill in a tax self-assessment, I've never done one of those before?

A bit of background, I am a single homeowner (mortgage free) with no children, I am full time employed and earn £32k a year.

Any and all advice gratefully received,
my thanks
Genfink

kelloggs36

I would invest it in a long term savings account which is guaranteed not to lose your investment - that is because I am risk averse! Locking it away for longer usually means better returns. Can't tell you about the tax implications but if your mum survives 7 years after gifting it to you then it falls outside of her estate and is not subject to inheritance tax.

jem16

Giving you £10k will have no impact at all on your tax and you have no need to declare anything.

As to any tax implications on your parents, this would only apply if they were to die within 7 years and Inheritance Tax was due on the estate. If you feel this is an issue each parent can gift £3k with no IHT implications each tax year.

Just enjoy the gift.

Mojisola

In addition to the information given above, you might need to consider the benefits angle. If people are likely to need means-tested benefits or help with care costs and it's found that they gave away money in the recent past, they will be assessed as if they still have it.

genfink

Thanks for the advice, in response to the points you raised:
kelloggs36 - really hope my mum survives 7 years from now! and doesn't need to go into a care home - Mojisola - would that length of time be classed as recent past?
Jem16 - does that mean I could literally pay a cheque for ten grand into my bank account and not worry about telling HMRC or anything? Seems too good to be true to me?!

jem16

genfink wrote: »

Mojisola - would that length of time be classed as recent past?

The care home issue is a different case altogether. Councils can go back any length of time if they feel the money was given away to avoid care home fees. Is your mum elderly and likely to need a care home?

Jem16 - does that mean I could literally pay a cheque for ten grand into my bank account and not worry about telling HMRC or anything? Seems too good to be true to me?!

You don't need to tell HMRC anything. Obviously if the amount accrues interest you would pay tax on that but no other tax is due.

Mojisola

If your parents are in reasonable health at the time they hand the money over, it would be hard for the council to claim it was done as "deprivation of capital" but that may not stop them having a go - especially as their budgets are going to get squeezed over the next few years.

mitzi01

I believe I am right in saying that if your 'gift' allowance of £3k for the prior year was not used then this can be carried forward to the current tax year. Thus your mum could gift you £6k in the 10/11 tax year and a further £3k in 2011/12 without there been any implications on any IHT liabilities irrespective of survival time.
Just be aware the total towards the £3k can be things other than cash i.e. car.
This also applies to your fathers allowances so I would think there is no reason why your mother and father cannot gift you £10k now with no consequence on IHT or IT (assuming no previous gifts in the last 21 months)

Goldenyears

genfink wrote: »

- does that mean I could literally pay a cheque for ten grand into my bank account and not worry about telling HMRC or anything? Seems too good to be true to me?!

You could pay a six figure sum into your current account with no worries. If your bank had your phone number on record someone would very likely ring you offering "investment opportunities". That's about all.