Okie to receive £20,000 gift from friend??

sdd7677

I am 33 year old, live with my family(wife and a year old child). My father-in-law helped a person in the past in his very hard time(in India) and the person is settled in UK long ago(35 years), aged about 60 now. Since we have baby, I am thinking that wife should leave the job and spend some quality time with the baby before she start her career again. My father-in-law's friend came to know that and asked my wife that he is willing to give some money(£20,000) from his savings to pay off the remaining mortgage balance that we have got. We don't have to repay any money. It's since a year now he is insisting but I don't know about legality related to this. we are fully employed by University and the friend has got his own business and would like to do transfer money by online banking/cheque.

The reason of the background is-do I/friend have to pay any tax for giving this money as gift? Any declaration is required? Also, with whom can I double check(HMRC/solicitor??) that there is nothing wrong with this.

00ec25

a person in the UK receiving a gift of money does not have to pay any tax on the amount they receive. TYhere is no "gift tax" in the UK

for the person giving the money they may have a tax liability ion the future becuase such a gift will be considered under Inheritance Tax rules once the donor is dead, whereupon the donor's estate (not you) may have to pay IHT if the total value of the estate is above the IHT limit applicable at that time
Note, if the donor lives for 7 years after making the gift then it is free of IHT liability

Summary

you - No tax on the gift you receive
donor: no tax on the gift given, but on death their estate MAY have to pay tax