Once in a lifetime financial gift

bethanjoy

My parents have very generously offered to gift me the deposit on my first house, but I am very worried about the tax implications of this.
I have searched online and found that £3,000 can be gifted per year tax free, but I can't find anything about a one off financial gift.

Does anybody know how much the government would take if my parents were to give me £20,000?

Many thanks in advance

somethingcorporate

Nothing! but... some considerations for IHT and deprivation of assets if your parents would need to go into care.

bethanjoy

Sorry for my ignorance but do you mean would I then look after my parents in later life in return for the money or would the £20,000 be 'investigated' (for want of a better word!) should then need state care?

I hope that makes sense!

Tax_guru

There is no immediate tax issue with your parents gifting you any sum of cash. You do not have to declare this to HMRC and you will not be taxed on it. The only issue which may arise is that if your parents die within seven years of giving you the gift then it still forms part of their estate for inheritance tax purposes. Inheritance tax is chargeable when an individual’s estate is valued at over £325,000.

The £3,000 you referred to is the maximum gift an individual can make each year without it remaining in their estate for inheritance tax. If it is not used in one year then it can be carried forward a year. So your parents could potentially have an allowance of £12,000 in total that they could make without inheritance tax consequences. I suggest your parents keep a note of when they make the gift and, if they have an accountant they should also advise him.

ceeforcat

Unlimited regular gifts out of income can be made but they must be regular and must not affect the donor's standard of living.

bethanjoy

Thank you very much for your comments, they have been very helpful! x:T

tyllwyd

Also, you will probably need to tell the mortgage company when you apply for a mortgage that your parents are gifting you the deposit. They might ask to see a bank statement from your parents to prove where the money has come from.