Gifting

bluffer

Hey folks. Hope you can clarify something.

I am trying to find out about the tax free gifts we can give/receive each year. I know the limit is £3k a person and that the allowance can be carried forward for a year if it isnt used.

But here is the question

Parent A and Parent B wish to give Child C £10k. This limit is under the carry forward and current year limit but how to do the transfer?

1) one cheque from joint account of A & B for whole amount?
2) two cheques from joint account of A & B for half the amount each?
3) two cheques from sole account of A & B for half the amount each?
4) some other permissable combination?

Does it actually matter as long as its recorded as a gift somewhere?

Thanks

pjcox2005

It shouldn't matter as long as documented as when calculating the IHT you'd just apply the exemptions (current and carried forward) against the total gift from each parent.

It will also only impact if they die within 7 years of giving the gift otherwise it would be exempt anyway (i.e. more can be gifted and be outside inheritance tax if they are alive then).

CLAPTON

there is no limit on how much you can gift to anyone

at the time of the gift there is no tax to pay for either the recipient or the giver

however, if you die wihin 7 years then the value of the gifts is added back to the value of your estate and so inheritance tax may be payable depending upon the circumstances

are you both likely to die within the next 7 years?
what exactly is your concern?

kidmugsy

bluffer wrote: »

Parent A and Parent B wish to give Child C £10k.

3) two cheques from sole account of A & B for half the amount each?


Does it actually matter as long as its recorded as a gift somewhere?

(3) is how we do it. Each of us writes a letter saying, for example, "This gift of £5000 uses up my £3000 IHT gift exemption for 2012-13 and £2000 of my exemption for 2011-2012." Everyone keeps a copy of the letter. This seems to us much the clearest way to do it, leaving effectively no room for challenge, and no complexity that could cost money to unravel in future.

Mojisola

kidmugsy wrote: »

(3) is how we do it. Each of us writes a letter saying, for example, "This gift of £5000 uses up my £3000 IHT gift exemption for 2012-13 and £2000 of my exemption for 2011-2012." Everyone keeps a copy of the letter. This seems to us much the clearest way to do it, leaving effectively no room for challenge, and no complexity that could cost money to unravel in future.

Your executors will love you if all your finances are so clearly arranged!

CLAPTON

Mojisola wrote: »

Your executors will love you if all your finances are so clearly arranged!

I rather plan to keep no reccords at all.
I'm sure the overall IHT will somehow be less.

bluffer

kidmugsy wrote: »

(3) is how we do it. Each of us writes a letter saying, for example, "This gift of £5000 uses up my £3000 IHT gift exemption for 2012-13 and £2000 of my exemption for 2011-2012." Everyone keeps a copy of the letter. This seems to us much the clearest way to do it, leaving effectively no room for challenge, and no complexity that could cost money to unravel in future.

thanks

i thought it would but wanted to double check as we need to faff about with transfers between accounts as almost everything is in joint names.

jennifernil

We always do gifts through sole accounts, but don't use cheques, just a bank to bank payment.

I have a notebook I record everything in, mainly so I can keep track of who has had what, with the original idea of treating both children equally as far as possible.