donee

beti1984

Hi all,
I am planning on buying a house. The property is around 80000 pounds, 35000 morgage and 5000 my savings and 40000 a gift from my parents. Funds that my parents want to donate to me will be coming from abroad. I read in your posts that in this case my parents need to write a letter saying that it is a gift from them to me and they do expect the money to be paid back. My question is: is the only document I will need to get from them, will I have to pay any tax on top of it, is there a template of the letter, will I have to inform anyone about such a big amount of money being transfered into English economy?
Thanks for any help.

quotememiserable

can you just clarify something. you say they DO expect you to pay back. Did you mean to type DO NOT?
The only tax on gifts is inheretance tax, and £3000 per year is exempt. Any more than that and you parents have to survive the gift by 7 years for the money to be out of estate.

yoyoegg

Funds that my parents want to donate to me will be coming from abroad

Are they domiciled abroad for tax purposes? If so, you'd need to find out how that country treats gifts.

They should certainly make a will. To avoid UK IHT if they die within seven years and are above the threshould, take out a cheap life insurance with tapering benefits which match the IHT liability in the UK.

beti1984

Sorry, of course I meant they do not expect me to pay it back.

beti1984

Money will be comming from poland and as far as Iand they know the donee is tax free over there. Do you think it would be better if the funds were transfered onto my account in poland and then to great Britain, or can it go straight from my parents account to my English one? Does it make any difference?

kingstreet

You'll be asked for a gifted deposit letter and the lender may request evidence of the deposit in the donor's bank account.

I'm dealing with such a case as I type this.

The gifted deposit letter should state;-

- the donor's full name and address
- the relationship
- the amount
- that the gift is not a loan and is not repayable
- no interest in the property is being taken.

Here's the guts of the one I'm using;-

Mr & Mrs X XXXXXX
George Crescent
Liverpool
L1 1AA

Lenders Name & Address

01/04/2013

Dear Sirs,

Re: Property address and application number

We confirm that we are gifting the sum of £ 25,000 to Mrs YYY in respect of the purchase of the above property. We also confirm that this gift is non-refundable and non-interest bearing and we will not retain any interest in the property whatsoever.

The applicant is known to us as our ZZZZ.

Yours faithfully


Signed
Name
Date
&
Signed
Name
Date

beti1984

Thank you for that. Just one more question: there is no need to inform any organisation/ institution about such a transfer being made? All can be passed onto solicitors hands?

kingstreet

I don't understand the question.

If you are asking about a transfer being made by a donor outside the UK, I can't tell you about the requirements of institutions abroad. If the country in question has any kind of exchange controls, they may have to obtain permission to send money overseas.

I know of no requirement to report the arrival of such funds in a UK account.

What I set out before is a mortgage lender's requirement where part of a deposit is being gifted, whether from a UK or overseas donor.

The solicitor has his own money laundering and other requirements to satisfy, so they may be the same, less onerous or more demanding, depending on the firm's policy.

AlexMac

Assuming you sort out all the legal stuff (and as well as the good advice above, your solicitor will guard you against allegations of money laundering if they're anything like as efficient as mine), I'd just add the obvious point...

that an international money transfer is better done via a specialist 'FX (foreign Exchange) company that a high street UK bank.

I used MoneyCorp very satisfactorily, but see the advice about FX elslwhere on the main pages of this website