Gifting Money & HMRC

lookin4arnserz

Am I free to give my adult sons money as I've heard HMRC rules state you can only gift £3000 in any one tax year.
If you gift more, you have to survive for 7 years from the date of the gift or else what?

One of my sons is struggling desperately to save a deposit on a house and I have savings.
Can I write a cheque from my account for him to use as a deposit?

If I write him/them a cheque for say £10,000 each, who is going to question it if its not included on an annual tax return.

Another scenario - If I withdraw cash from my bank account and give it to them, who is going to know.

I find this all so confusing as you hear about lottery winners buying cars and houses for people out of their winnings and wonder what the difference is?

Many thanks in advance for any answers.

anselld

You can gift as much as you like, it doesn't change your current tax. The potential liability is for IHT if you die within 7 years, which is the £3000 limit.

I believe it can be more than £3000 if you can show that the gift is made from regular disposable income.

As to how they find out, that would tend to depend on how honest you are, but HMRC could investigate any large withdrawals / deposits.

anselld

Oh, and there is a 1 year carry over so if you have not made previous gifts you can do £6000 without question.
Plus if you are married it is that could be £6000 each.

tyllwyd

The inheritance tax question isn't a huge issue - if you keep the money, it will be part of your estate anyway, so if the gift isn't being made for tax planning purposes, it won't cause any extra tax to be paid and may reduce the final tax bill. If you were facing going into a care home in the near future, you might have to watch out for intentional deprivation of assets, but it doesn't sound as if that applies to you.

The main thing to remember is that if your son needs a mortgage, he will need to prove where the deposit came from, and the mortgage company may ask to see your bank statements. He should make the situation clear when he applies for a mortgage, and you should both be careful to make sure there is a clear paper trail so you can prove where the money came from and where it went. Handing over a large sum in cash is likely to cause problems rather than solving them.

thenudeone

anselld wrote: »

You can gift as much as you like, it doesn't change your current tax.

Neither does it affect the recipient, because it is not income.