Gifts to Children (money or otherwise)

jooles1111

My elderly mother wants to help me to buy a new car. I understand that she can give me up to £3000 per year and £6000 if she has not used last year's allowance.

If she bought the car herself and then gifted it to me would inheritance tax still come into it?

Alternatively, if she bought the car and I paid her back monthly over a period of years, ie. a loan, would that incur inheritance tax?

Thank you
Julia

HappyMJ

jooles1111 wrote: »

My elderly mother wants to help me to buy a new car. I understand that she can give me up to £3000 per year and £6000 if she has not used last year's allowance.

If she bought the car herself and then gifted it to me would inheritance tax still come into it?

Alternatively, if she bought the car and I paid her back monthly over a period of years, ie. a loan, would that incur inheritance tax?

Thank you
Julia

She could buy the car in her name...she being the car's owner and then get insurance on the vehicle with you being the main driver and her being an additional driver. Just an idea....

If she were to die you can buy the car from the estate which be for much less than the purchase price.

getmore4less

Inheritance tax(IHT) only happens when she dies.

If her assets are below the nill rate band(£325k or potentialy £650k) there is no IHT.

not exempt gifts get aded back into the estate if less than 7 years has passed

Gifting now will not make the IHT situation worse.

making it a loan won't help

zygurat789

If the gift is paid out of income, not capital funds, then there is no limit.

Biggles

zygurat789 wrote: »

If the gift is paid out of income, not capital funds, then there is no limit.

That's 'surplus income', not total income; ie, to quote HMRC, you must have 'enough income left after making them [the gifts] to maintain your normal lifestyle'.

pollypenny

I'd always wondered how 'out of income' worked. Not many people have a spare £3000 coming in every month.

zygurat789

pollypenny wrote: »

I'd always wondered how 'out of income' worked. Not many people have a spare £3000 coming in every month.

That would be up to £3000 per year. £250 per month

pollypenny

But you'd have to save it to give in a lump sum.

Mojisola

HappyMJ wrote: »

She could buy the car in her name...she being the car's owner and then get insurance on the vehicle with you being the main driver and her being an additional driver.

She doesn't need to be named as a driver. My Dad's insurance specifically names him as not allowed to drive the car. Otherwise, it's insured for over-50s.

getmore4less

zygurat789 wrote: »

If the gift is paid out of income, not capital funds, then there is no limit.

They also need to be regular.

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