non-taxpayer receiving gift

katyheather

:think: I am currently a non-tax-payer (aka housewife!) and have completed an R85 form for my savings accounts.
My parents are thinking of giving me an amount of money (a few thousand I think, but not confirmed, as just kicking the idea around at the moment!).
I believe, from researching other threads, that I won't be taxed on any amount given to me so long as my folks stay in the land of the living for 7 years!
But,more importantly for me, will any amount given affect my non-taxpayer status?
Can I put this gifted money in my account and still receive tax free interest?

CLAPTON

your parents can give you as much as they like and you will not pay any tax. you are correct that if they die within 7 years then it may attract inheritance tax but that another matter.

you can invest it how you like and it wouldn't affect your tax free status unless your total interest per annum came to more than your personal allowance ..currently £5035.

ericthekidstoner

good advice there from clapton

you should still receive tax free interest as long as it doesn't exceed your personal allowance

but if you used the money for shares and make a profit (I think) you'll have to pay captial gains tax, unless it's within your ISA.

katyheather

Thanks very much for your responses! Rather new at this chat thing, so I'm "well chuffed" that it worked!. Just need to do some number crunching when I know how much I am going to get!?!!

mcost_2

Just a little bit more info for you.

An individaul can give a gift up to £3000 each year without needing to refer to the 7 year rule for IHT. If someone hasn't given a gift the previous year they can also use the £3000 limit from that year as well, but you can't go back any further than that.


Effectively you could be given £6000 before the 5th April 2006 (if no gift given in previous tax year) and given another £3000 in 2007/08 and this would not be taken into account in the estate of the person giving the gift if they did not survive it by 7 years.

Remember its not £3000 to each person its a limit of £3000 in total.
Smaller gifts up to £250 each can also be given to seperate people

Check this out, but I'm sure you will find it is right.

paperconservator

Having read the article on inheritance tax, I am still unclear as to whether one can give £3000 away AND gifts of up to £250 in any tax year. For example, my elderly mother would like to give £3000 to her children and then gifts of up to £250 to her 9 grandchildren. Advice please!

RayWolfe

Your mother could do what she wants. The only restriction is that the 3K and the 250 must not be to the same person.

CLAPTON

Assuming your grandmother has any estate over 312,000 or 624,000 (if she can take advantage of her husbands IHT allowance) then when she dies her estate will be liable to IHT on the excess over the IHT limit at 40%.

If she gives away some of her money now and lives 7 years then the gifted money will lie outside the estate and the IH tax will be less. At worst if she dies within 7 years then the IHT will be the same as if she hadn't given the money away.

Of course if she lives long enough for the conservatives to be elected then they have promised to raise the limit to 1million per person (or 2m for a couple).

In addition, certain gifts are allowed that aren't included in the 7 year rule

taking your example she can give her children a total of 3,000 (i.e. if there were three children then she could give 1000 to each)
AND she can give any number of individual gifts of 250 to different people ..so she could give 250 to each of her 9 grandchildren. but she couldn't give 250 to one of her children who had already received 1,000)


And if she gives regular gives from income (i.e. not from savings) then these are exempt... probably best to keep some sort of record of these.