Tax Implications ?

Shiloe

(Please move this if it is the wrong section thanks)

I know the rules regarding parents giving there children money i.e inheritance tax however are there any rules in adult children giving their parents (mother) money ? We are taking in the region of £10,000

Many thanks

noh

Excluding wedding gifts and gifts between married/civil partners the situation regarding inheritance tax and gifts is the same regardless of the relationship between the parties.

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#1

thenudeone

I know it's seems unlikely and may not be relevant, but inheritance tax works in all directions, not just to parents giving to their offspring.

Shiloe

Oh right so I can legally give my parents £10,000 no questions asked and if I dont die within 7 years theres no tax to pay ?

Linton

The same inheritance tax rules apply were the child to die.

xylophone

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm - see here for full explanation.

calypso_rhapsody

If you make gifts out of income then they do not count as 'potentially exempt gifts' for IHT and so even if you die within 7 years they would not count towards your estate valuation. Can't remember exactly what the rules are to qualify for gifts out of income - i have a feeling that it's something about not reducing your lifestyle (am sure you can find it on the HMRC site). I make payments of £150 pm to my mother and am very comfortable (or was when i set it up) that it would not be a PE gift. But that £1800 a year - nothing near £10k ... guess it depends what your income is.