Large Financial Gift to Son that he will then pay off his mortage on.... tax concerns

MQ57

Hello,

There is a possibility that I might be able to give my children some money before I die. I am only in my 50's so I am not expecting to die within 7 year (fingers crossed).

We have had a tough time over the last 20 years and I have never been able to take any financial pressure off my children, so, an opportunity has arisen where that might be possible (it's not from selling my house). This is earned money already taxed at source.

I have 2 examples/sons:

1. My son and his wife have a mortgage outstanding of around £130k - I would love to be able to give them a gift of the value that they could use however they want, but the idea will be to release them from a monthly debt of mortgage.

2. My other child lives with me and had a serious accident that has put him in a vulnerable position work-wise and he has not worked since this accident that left him with amputations 2 years ago. I would like to buy him a house, or give him the money to use for a house so help secure his long term future. Lets say this would be a little terraced house up to say £130k too, which is possible in my area.

- Can anyone tell me what implications may exist for gifting this level of money to children while still alive (assuming I do not die within 7 years).

I am under the impression that I can gift if taxed at source without concern, but I am not sure about this at all.

Many thanks in advance of your help

Mojisola

There's no gift tax in the UK.

Would the child in Q 2 be best served by owning their own house? Unless their future income is going to be adequate to cover repairs and maintenance of the property, it might be better to look at getting him/her independent in a secured rental and put money into a trust for the extras that will make life easier in the future.

MQ57

Hi Mojisola,

As I am fearing for the long term security I would be worried about a renting situation as I won't be here forever of course. At least with his own house he has a roof over his head as long as he lives, so that is my reasoning there - but thank you for your idea, I do understand your logic.

So, as there is no gift Tax in the UK, I can give my son a large sum, say £100k or so and he can pay off his mortgage or buy a house with that, and there would be no comeback or tax concerns?

That sounds really good, thank you for your reply

Mojisola

MQ57 wrote: »

As I am fearing for the long term security I would be worried about a renting situation as I won't be here forever of course. At least with his own house he has a roof over his head as long as he lives, so that is my reasoning there - but thank you for your idea, I do understand your logic.

Has he looked at council properties? He may be entitled because of his health needs and that would give him security of tenure.

We've got one child who couldn't live independently at the moment and it is a worry for the future.

MQ57

Hi,
The unfortunate thing in our town is that the council areas are seriously poor and strewn with issues that could create other more serious problems for him, which is a shame.

I think if he had a little house in a nice street somewhere close to us all he would be fine and financially this would help him too as I do expect he will return or create work for himself when he has healed a little more. However, I think you're right in so much as perhaps some consideration for a trust might also be something to look into too.

Thank you

xylophone

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm read this carefully.
http://www.health.com/health/article/0,,20456406,00.html might be worth a read.