Giving a lump sum to a friend – Are there tax implications?

vonsworld

I’d like to give a lump sum to a friend, not a spouse or family member, and was wondering what are the tax implications?

I understand that Inheritance tax is not an issue, since if I were to die within 7 years my estate would be less than £325,000.

However would the friend pay tax on the lump sum gift? Or if they invested the money would they simply pay tax on any future interest it earned?

On their future tax returns if they suddenly declared an investment that was not there in previous years (eg. The gift from me in their bank account) would HMRC not be interested in where it came from, just in the interest it was earning?

Thanks

TadleyBaggie

There is no tax payable on gifts.

ceeforcat

On their future tax returns if they suddenly declared an investment that was not there in previous years (eg. The gift from me in their bank account) would HMRC not be interested in where it came from, just in the interest it was earning?

Possibly - documentation is important i.e. a note from you to say that it is a gift, is not repayable at any time and no interest will be received.

ILW

Trying to get out of supporting your children?

dan.date66

1) No tax implications for you as your estate is below the IHT threshold
2) Your friend will not pay any tax on the gift, just on any interest/ dividends earned thereafter
3) Best to document the gift however - you never know, but you may win the lottery next week and your estate is suddenly over the IHT threshold....