Gifts - Will the recipient be liable for tax

zygurat789

getmore4less wrote: »

Not if you want to comply with the strict rules of tax exempt from income.

And what might that be?

zygurat789

Credit-Crunched wrote: »

Contributions to a pension are not taxable (other than the non reclaimable 10% divi credit)

They may also be non taxable upon receipt if personal allowances allow.

In addition you can take 25% tax free as a lump sum.

Agreed, not ideal, but still possible tax efficiences here

Contributions are taxable if they are over the limit.
Pensions ARE taxable, they may be no tax due if total income is less than allowances but they are still taxable.

The 25% lump sum is tax free in addition to nothing.

getmore4less

zygurat789 wrote: »

You can give ANY amount out of income so long as it does not reduce lifestyle or, more impotantly, your bank balance or investments.
And you can give up to £3,000 pa which will be disregarded for IHT purposes.

getmore4less wrote: »

Not if you want to comply with the strict rules of tax exempt from income.

zygurat789 wrote: »

And what might that be?

Start here and research the key is they must be "normal" which is not always the case for ANY gift

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm14231.htm

This exemption applies where the taxpayer can show that a gift (transfer of value) meets all three of the following conditions:

• It formed part of the transferor’s normal expenditure (IHTM14241),
• It was made out of income (IHTM14250), and
• It left the transferor with enough income for them to maintain their normal standard of living (IHTM14251).

zygurat789

getmore4less wrote: »

Start here and research the key is they must be "normal" which is not always the case for ANY gift

http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm14231.htm



This exemption applies where the taxpayer can show that a gift (transfer of value) meets all three of the following conditions:

• It formed part of the transferor’s normal expenditure (IHTM14241),
• It was made out of income (IHTM14250), and
• It left the transferor with enough income for them to maintain their normal standard of living (IHTM14251).

So under these rules Bill Gates could give billions away without it affecting his IHT position.

The HMRC rules you quoted allow for a gift of ANY amount so long as it is out of income, does not affect lifestyle and is normal (for the donor)
I went to a seminar where a very reputable firm of CAs said either in the year of or before death, (with intent to continue) or in each of the two years before death, constituted normal.
Seems reasonable to me.

These HMRC statements will be as effective as IR35 statements

Credit-Crunched

Quote:
Originally Posted by Credit-Crunched
Contributions to a pension are not taxable (other than the non reclaimable 10% divi credit)

They may also be non taxable upon receipt if personal allowances allow.

In addition you can take 25% tax free as a lump sum.

Agreed, not ideal, but still possible tax efficiences here
Contributions are taxable if they are over the limit.
Pensions ARE taxable, they may be no tax due if total income is less than allowances but they are still taxable.

The 25% lump sum is tax free in addition to nothing.

-

My post clearly says that they are taxable above the personal allowance.

In addition was a turn of phase, sooo pedantic!

Contributions are only taxable if they exceed £50k or ones annual salary, and the figures that are being discussed of £250, i dont think that this will be an issue as you can even pay £3,600 gross if no income received with full tax relief.

zygurat789

Credit-Crunched wrote: »

Quote:
Originally Posted by Credit-Crunched

They (pensions) may also be non taxable upon receipt if personal allowances allow.

Pensions ARE taxable, they may be no tax due if total income is less than allowances but they are still taxable.

.

My post clearly says that they are taxable above the personal allowance.

In addition was a turn of phase, sooo pedantic!

.

So you are saying in the same post that pensions are taxable and non-taxable. If you are going to deduct your personal allowance from anything make it taxable income, to deduct it from non-taxable income would be pointless.
For your benefit non-taxable income is Interest from ISAs and attendance allowance. Taxable income, most other things, of course, including pensions, earnings and non-ISA interest.
Such distinctions are not pedantic they are essential to the tax and tax avoidance industries and you would be well advised not to complete a tax return until you fully understand the difference.

Credit-Crunched

I understand the differences; you are taking a turn of phrase and playing on semantics.

My point was that if income from a pension is under the personal allowances then no tax would be paid.

My main point was the preferential tax treatment when contributing to a pension plan, not the following tax treatment.

Thanks for the response, but next time, try to remove the patronising bass from your response, it makes you sound like a little bit conceited.

zygurat789

Credit-Crunched wrote: »

I understand the differences; you are taking a turn of phrase and playing on semantics.

My point was that if income from a pension is under the personal allowances then no tax would be paid.

My main point was the preferential tax treatment when contributing to a pension plan, not the following tax treatment.

Thanks for the response, but next time, try to remove the patronising bass from your response, it makes you sound like a little bit conceited.

I know what you meant but it wasn't what you said, just try and say what you mean in future so as not to cofuse those who don't know what you mean