Giving a large amount of money to family members

Pold

Hi Martin/Peps,

I am going to inherit a fair amount of money soon and would like to pass some/most to my family, I am already going to get done by the government for inheriting it in the first place, do I have to pay again to gift/give it to my family?

I would appreciate your input.

Regards,

L.

rising_from_the_ashes

Congratulations!

I'm not 100% sure (hopefully someone with more knowledge will be along soon) - but - as with all tax things - I think it can get quite complex.

I *think* that it depends on what the money's going to be used for (eg if someone's going to invest it & earn money from it, tax may have to be paid)
I *think* that there's a limit that can be paid each tax year without tax having to be paid (only as I remember having to sign something when I was gifted money by a relative)
I'm also pretty sure that inheritance taxes may have to be paid (again, even though you've paid them) if you unfortunately die before 7 years are up.

Just came across this: http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#3

Might be worth a chat with an IFA.

Person_one

rising_from_the_ashes wrote: »

Congratulations!

I'm not sure that's quite the right response, presumably somebody close to the OP has just died or is expected to soon.

cte1111

You can give as much as you like to anyone without paying tax. The first £3,000 in total that you give in a tax year is free from IHT implications. Any gifts over £3,000 will become 'potentially exempt transfer' (PET) for IHT purposes. If you have not made a gift in the previous tax year, then you can carry forward 1 year's worth of exemption, so potentially £6,000 if you have not made a gift in the last tax year.

If you die within 7 years of the gift; and your total estate is over £325,000, then the recipient of a PET may have to pay some inheritance tax on your death. This is on a sliding scale, so decreases from 3 years onwards.

If you are giving money away specifically to avoid paying for nursing home fees, then there is a separate issue - deprivation of capital. This is nothing to do with IHT but means that you may be treated as if you still had the capital in the unlikely event that you need residential care in the future.

gizmo111

Depending on the amounts it may be worthwhile talking to a sociltor and the executors and making a legal change to the will.

Oldernotwiser

Do you receive any means tested benefits?

mountainofdebt

Oldernotwiser wrote: »

Do you receive any means tested benefits?

I can't think of any other reason why the OP would 'get done by the government' if they didn't.

Annisele

I assumed "done by the government" meant inheritance tax. If it does, then a deed of variation might be a good idea - effectively that means we all pretend the will said the money went directly to the OP's relatives, rather than to the OP. That means that even if the OP dies within the next seven years there'll be no additional inheritance tax to pay.

persa

OP, condolences for your loss.

rising_from_the_ashes wrote: »

I *think* that it depends on what the money's going to be used for (eg if someone's going to invest it & earn money from it, tax may have to be paid)

No. As a general point of UK law, there is no such thing as tax on gifts for the donor, with exceptions arising where the donor and donee make an election to save the donee paying tax and the donee then goes walkabout. Assuming the OP gifts something of value to a family member and doesn't make any such election, there is no risk of getting stung personally by HMRC.

With cash though, the above falls out of the picture completely and the rule is quite simply there is no such thing as tax on gifts for the donor.

It's a common misconception, so I wanted to clarify.

rising_from_the_ashes wrote: »

Might be worth a chat with an IFA.

If we are talking a serious amount of money, I would recommend a qualified tax adviser or tax accountant with a special interest in IHT.

Agree with everything else said so far.

Oldernotwiser

Annisele wrote: »

I assumed "done by the government" meant inheritance tax. If it does, then a deed of variation might be a good idea - effectively that means we all pretend the will said the money went directly to the OP's relatives, rather than to the OP. That means that even if the OP dies within the next seven years there'll be no additional inheritance tax to pay.

I assumed this as well, but if the OP is on benefits, a deed of variation won't alter things.

Mojisola

Pold wrote: »

I am going to inherit a fair amount of money soon and would like to pass some/most to my family, I am already going to get done by the government for inheriting it in the first place, do I have to pay again to gift/give it to my family?

Oldernotwiser wrote: »

Do you receive any means tested benefits?

This is an important question. If Pold is on means tested benefits, then no money should be passed on to other people.