parents want to give/lend me cash but will there be tax

sanju

Hi

My parents want to give/lend me £100k as im going to move to australia in Feb 2012 and I was wondering if this would be a problem in terms of tax. If so whats the best way round this all?

Many thanks

SeniorSam

No tax implications at all on gifts unless your parents die within 7 years of making the gift and have world wide assets that exceed £325,000 each. This assumes they are resident and domiciled in the UK.

Your parents can gift £3,000 each every tax year and if they have not made previous gifts, they can make the gift for last year as well. Therefore £3000 for last year, £3000 this tax year times 2 = £12,000 that would be exempt anyway.

Hope this helps

Sam

sanju

Thanks for reply

So if they gave me the money I wont have tax man knocking asking for a cut?

Thanks

ankspon

You could put it in my bank account and i will filter it through to you in Oz,honestly.

SeniorSam

That is correct. In any case, taxes are on the giver not the receiver when it comes to inheritance tax.

Just a small point, which may not be appropriate at all. If you have children that you were educating privately in Australia, your parents could set up an arrangement to pay the fees annually. This may help them reduce their assets legally if they need to? Very difficult to offer any ideas for thought without knowing the full financial position.

Sam

p00hsticks

I'm not an expert, so may be wrong, but have a feeling that if they are going to be lending you money rather than giving it to you, and if you are going to repay them with interest, then they may be liable to pay income tax on the interest part of the repayments.

ceeforcat

You are correct p00hsticks - and the poster could not legitimately claim relief for that interest.

sanju

So if they just gave me the money then it be fine?

Also do they both have to live for 7 years after giving the money to be exempt from tax?

And one more thing, how dose the tax man know my parents have given me cash if I was not to tell them?

ceeforcat

1) Yes (from your point of view)

2) If they live seven years this money will not form part of their estate.

3) When your parent's estate is finalised, the executor is duty bound to declare such gifts. If that is you ..........

le_loup

The tax man does not want to know, there is no tax!
However, the executors of the estate will know should the givers die within the seven year period.
AND there is a legal responsibility to let the tax man know of taxable event ... regardless. That's how our country works.
Edit: crossed with ceeforcat.

sanju

THANKS YOU ALL for you replies and your help.

Keep up the good work.

Sanj