cash lump sum - capital gains tax query.

Cmdr_Bond

My father has just received a substantial sum from an inheritance.

He does not want to keep it in a bank. I have managed to persuede not to "keep it under the mattress", instead I will be looking after it in one of my spare accounts - signing paperwork that says I am merely safeguarding it for him and that I will not touch it.

Is my bank liable to ask many questions about a large cash deposit and even though I am only looking after it - could I be hit for CGT?

I don't wish to disclose the amount, but is there an amount where CGT might be applied - I am unsure as there is no profit being made, just an on paper change of keeper.

CLAPTON

presumably IHT has already been paid

so
no further tax
no cgt

why would there be, as no gain (profit ) has been made

I'm not sure what paperwork you are talking about; what's that for ?

why don't you get him to open a several savings in his own name?
what's the problem?

xylophone

I don't think CGT comes into it!
However - 'keep it under the mattress" - a cheque? Or are you saying that he actually inherited a large sum in banknotes....
If a cheque, presumably it is drawn in his name so how do you propose paying it into your account?
Whether cash or cheque, your bank might query where the money came from. They might also not be happy about the unofficial nominee status.
Presumably interest will be paid on the deposit - your father is the beneficial owner and therefore might need to declare it should it alter his tax position or entitlement to benefits....

All in all, wouldn't it be a better idea for your father to open accounts in his own name?

Cmdr_Bond

CLAPTON wrote: »

presumably IHT has already been paid

so
no further tax
no cgt

why would there be, as no gain (profit ) has been made

I'm not sure what paperwork you are talking about; what's that for ?

why don't you get him to open a several savings in his own name?
what's the problem?

Yes, IHT has already been sorted. Re the "no gain", that is what I thought bit had to be sure.

He has an appointment with his bank to collect the cash - from the cheque he was sent. Unfortunately my mother subscribes to conspiracy theories and thinks she is being watched by the government or similar (actually she is quite delusional at times) and doesn't trust anything. At one point she was claiming that whole swathes of the country were just being obliterated! She also firmly believes that all information to the contrary (such as the google earth satellite image of said area) are just lies and mis-information. But apparently it is only her they are after.

Long story short, I can hold the cash or put in ISA's for them (as can my brother) so that it is safe. The paperwork I was alluding to was a signed document to say who the money actually belonged to in the event of any dispute.

xylophone wrote: »

I don't think CGT comes into it!
However - 'keep it under the mattress" - a cheque? Or are you saying that he actually inherited a large sum in banknotes....
If a cheque, presumably it is drawn in his name so how do you propose paying it into your account?
Whether cash or cheque, your bank might query where the money came from. They might also not be happy about the unofficial nominee status.
Presumably interest will be paid on the deposit - your father is the beneficial owner and therefore might need to declare it should it alter his tax position or entitlement to benefits....

All in all, wouldn't it be a better idea for your father to open accounts in his own name?

I agree 100 % it would be better in his own name, but alas that is not an option. Re tax status, there will not be enough interest to change that and I envisage the money disappearing within 2 years anyway.

Re the cheque - yes he has received a cheque, he has already spoken to his bank who have agreed to "cash" the cheque for him and he will be picking up the money in a couple of weeks. He was going to get a taxi, but as soon as I found out I said I would come with him and drive him back - or to my bank - whatever he wants. Have spoken to my brother, who should be able to help as well.

The sum is large, but I would not say it is astronomical or life changing (it falls well inside the maximum faster payments single transaction limit my bank offers).

I would have preferred of he had just banked the cheque, I have already given him some advise on ISA's and he wanted to put some away to cover future funeral expenses. But other than that, he and mum were just going to keep it in the house and gradually spend it.

This way it is at least in a bank, they can have a FP at any time and cash with some notice. It is after all, his money. Just wish my mother would be less paranoid.

Re the origin of the cash, I will make sure he is present, and brings the letter issued by the executor.

Cook_County

From everything you say, your father (and you) would be foolish to do this without a registered lasting power of attorney. Drag your father to a solicitor to get the LPA sorted out before you get involved.

xylophone

http://www.direct.gov.uk/en/Governmentcitizensandrights/Mentalcapacityandthelaw/Makingdecisionsforsomeoneelse/DG_195206

Might be worth a look in view of your description of your mother's condition?

What exactly do you mean about opening ISAs? Do you mean that you and your brother don't have any cash ISAs so you will use the money to open one each in your respective names? If you already have ISAs for this year you can't open others? Anyway, even if you don't have your own ISAs this year I am not sure that you can enter into the quasi nominee arrangement you have in mind?

If Dad has a bank account, what is his objection to leaving the money in it? I don't suppose he'd earn much interest (if any at all) if it's a current account, but as he was proposing to put it under the mattress it doesn't seem to matter to him?

Why not just persuade him to open an easy access ISA in a local building society so that he can just use a passbook when he wants to?

If he is really serious about the funeral. I believe it is now possible to "pay in advance" so he could do that with some of the balance? (Indeed, with the cost of a funeral now, and if the sum you speak of is the same as my bank allows, you might find that there is not much left anyway.)

Clearly you will deal with your family affairs as you see fit, but I would give this some more thought if I were in your position.

Cmdr_Bond

Thank you all for your help. The reason for not keeping it in the bank it down to mothers paranoia - cheers for the link BTW, but she has been like this ever since I can remember (I am in my 30's now) - she was put on seroxat a while back, and referred to a psychotherapist or psychologist (not sure which) either way, he referred her straight back to the doctor. She is totally capable of making decisions for herself though, even if they do seem strange.

As to the ISA's I think I have managed to persuade him to open 1 in his name. Myself and my brother have all our allowances available if needs be - but as I said earlier, I can't see the money lasting that long. They both have difficulty getting around, and mother is eyeing up some Quingo's at the moment - I'm not sure if this is a good move or not as I have heard mixed reviews on these (especially at the price they want for them) - but that is another matter.

Dad has already requested the money from the bank and has a date to pick it up - so even if it is only for 1 hour, I would rather it was under lock and key than floating around their house (in the middle of a council estate).

Regards the funeral, mum won't do pre-paid (she thinks she is going to disappear in a puff of smoke) so dad is trying to do it a sly way. By putting some aside in a bank account or ISA under mine, my brothers or both of our control, his reasoning is when anything happens we will be able to sort it without any fuss, meanwhile - should there be a financial emergency in the short term it will also be accessible if he needs it.

I understand the issues that can arise from these sorts of agreements, hence why I am prepared to sign paperwork amongst ourselves as I see this as a legally binding contract.

And our family is a very honest and close one, that I think it EXTREMELY unlikely anything would happen to cause aggro - that said I appreciate your concerns.

Cook_County

An LPA is the only sensible legal arrangement currently available.

Your honesty is not in question, but your parent's health may fail and no-one would be able to manage their affairs at all withot enormous pain should either lose capacity at some future stage.