Can one actually save hundreds of thousands without problems?

pqrdef

thenudeone wrote: »

But, if your income is £50k in one year and only £30k the next; it's bad because paying higher rate tax may be unnecessary.

I take your point. Though in that case the problem might be better described as not making the fullest use of the lower tax band.

lisyloo

Nope, been like it for as long as I can remember.

Can anyone provide a link for income tax on gifts.
My understanding is that there is no income tax on gifts but potentially IHT.
I think we need to settle this one - one way or the other.

alanq

The only links that I have found for income tax and gifts are

parents to children - where if the child's INCOME exceeds a threshold then interest earned on gifts from parents is taxed as the parent's income

US sites. It seems the US has Gift Taxes.

In the UK AFAIK genuine gifts are not subject to income tax.

lisyloo

In the UK AFAIK genuine gifts are not subject to income tax

Thanks that what I thought too.

MoneySaverLog

No limit, I know someone who gifted a £600,000 house to a family member to avoid inheritence tax, as she put it she worked hard all her life and was dammed sure she was not going to let the tax man take it away after she had gone.

So gifted it to her daughter, the 7 years have passed safely now :-)

Aegis

MoneySaverLog wrote: »

No limit, I know someone who gifted a £600,000 house to a family member to avoid inheritence tax, as she put it she worked hard all her life and was dammed sure she was not going to let the tax man take it away after she had gone.

So gifted it to her daughter, the 7 years have passed safely now :-)

I assume the parent hasn't been living rent-free in the property for that time?

Credit-Crunched

alanq wrote: »

The only links that I have found for income tax and gifts are

parents to children - where if the child's INCOME exceeds a threshold then interest earned on gifts from parents is taxed as the parent's income

US sites. It seems the US has Gift Taxes.

In the UK AFAIK genuine gifts are not subject to income tax.

Any interest exceeding 100 (pounds) p.a is taxed on the parents if the money is gifted to the children

MoneySaverLog

The house is owned outright, no mortgage.

I've no idea if she pays rent to the daughter or not, I would say not but cannot be certain. Would not think it would matter though surely if daughter wants parents to live with her I cannot imagine a rule against it.

gadgetmind

pqrdef wrote: »

So what's so terrible about going into a higher tax band?

What's terrible about it is that for every hour you work, you only get paid for 35 minutes of it, as the other 25 minutes are spent working for HMG so they can keep benefit scroungers in the style to which they have become accustomed.

Aegis

MoneySaverLog wrote: »

The house is owned outright, no mortgage.

I've no idea if she pays rent to the daughter or not, I would say not but cannot be certain. Would not think it would matter though surely if daughter wants parents to live with her I cannot imagine a rule against it.

This issue is that if the parents have been living there rent free, it's a gift with reservations, which might mean the gift is ineligible for inheritance tax relief. You need to get them to take a look at their situation to make sure that the gifting hasn't been ineffective.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm#3