20k implications re tax and what to do with this

DynamiteGirl81

Quite possibly farm and land. Would like to hope they will still be about in 7 years time but who knows. Take it tax people would trace this money, do I just phone up about it be upfront?

evenasus

I believe the tax people would be able to trace transactions.

We have paid our sons mortgages off, bought them cars etc. So I hope we live another four years.

I will still be over the assets/savings threshold even so.

But better they have money now while they have young children.

DynamiteGirl81

Hope so too evenasus lucky them. Not going to stress about it only live once. Just want to try look after the money as best we can/

bigadaj

DynamiteGirl81 wrote: »

Quite possibly farm and land. Would like to hope they will still be about in 7 years time but who knows. Take it tax people would trace this money, do I just phone up about it be upfront?

The land, if farmed commercially, is exempt from inheritance tax, what normally happens s that the house value is determined only for IT. Also inheritance tax would only kick in above six hundred and fifty grand for both parents if jt has not been used before.

Given your situation with a non mainstream lender and expensive rate the idea of using some for reducing ltv might be attractive, rates become very attractive at less than 75per cent. If used fir property then it might also be something your parents are
More comfortable with if they are older.

gadgetmind

evenasus wrote: »

I believe the tax people would be able to trace transactions.

Under most circumstances, the tax people couldn't find their own backsides using both hands and a mirror.

The exception to this is if they do a full investigation, and which point they wheel in some people who can read without moving their lips.

IHT, and to a lesser extent CGT, work on the "honest box with menaces" approach.

oldvicar

OP really shouldn't worry about paying any tax on this gift. At the very worst if parents die within 7 years it may be relevant and if they are beneficiaries they may get just a bit less then, but will not have to actually pay anything on this gift.

They needn't ask parents for letters either. If they are sadly the ones to be dealing with a parent's estate within 7 years, then keeping their own records will help them keep the "honesty box" (see gaget's post above) more than happy. For example keeping a printout of this thread so far will remind them of sufficient detail to fill in IHT declarations correctly. But IMO there is no need to worry about tax implications now just because of this generous gift.

DynamiteGirl81

Thanks all, Just need to have a think over next few days what to do with this money in the short term, can not see a Halifax Ultimate Reward Account that I put it in over the weekend making much lol.

I think we were given this with view to helping us move, as like many other people in the country stuck in a house one of us bought as a single person 8 years ago never the long term plan.

Someone said do not ask a bank for advice I understand this but who do you ask??? Is own research best though ISA rates etc get somewhat confusing for the lay person.

Thanks

jennifernil

Halifax Ultimate Reward pays no interest at all, so you want to get it out of there quickly.

Use the comparison sites and MSE to find the best ISAs, instant access ones if you plan to use the money within a year.

Look at rates on ordinary savings accounts too if you only plan to leave the money unused for a matter of weeks.

xylophone

Someone said do not ask a bank for advice I understand this but who do you ask??? Is own research best though ISA rates etc get somewhat confusing for the lay person.

Thanks

While you are thinking, you could each open an instant access isa and put the rest in the highest paying account you can find.

Santander still offering 3.30% on instant access isa and 3.2% on on-line savings - might suit?

GeorgeHowell

DynamiteGirl81 wrote: »

Was looking on inland revenue site but said only gifts excempt ar to certain beneficiaries such as husband wife or cival partner, does this mean for the person giving the gift not the person receiving???

Gifts between spouses and civil partners are exempt from inheritance tax absolutely, whereas other gifts normally follow the seven year rule. Unless the parents involved are very aged or in poor health I would not worry about it. I suspect that their wills could be worded such that if their estate is liable for inheritance tax then any gifts that got caught up in the seven year rule are exempt from it and that the IHT should be paid entirely from the balance of the estate -- but a solicitor would have to advise on that.