How much can you gift/give, without it getting out of hand?

JustAnotherSaver

By out of hand i mean one of you having to pay tax on the gift.

We were having a discussion today & in short ... my mum gave me just over £100 every month for many years, which was to help me when i came to move home. The amount was £112 to be precise.

I can't remember the exact year she began doing this but i know it was early 2000s. Some time around 2001-2003 i'd say.

She just left this to run & it built & built over the years. I've now about £15k i'd estimate because of this.

I would hazard a guess that £112 is ok on its own. Is it ok if it builds & builds to a larger fee though? If not, what about parents who give their young kid money for savings? Or do things get different when that child turns 18?

Obviously we don't want to fall foul of any laws. We're aware you can't just 'give' someone a large sum of money without tax implications, but we're not aware what those implications are (specifically) or what the 'large' amount is. A large amount of money to me & a large amount to David Beckham are going to be 2 very different figures.

Basically just looking to find out whether my mum has done anything wrong here or not, or whether i've done anything wrong by accepting it (legally speaking).

Masomnia

Tax implications are if she dies, in which case anything she gifts you within 7 years of her death could count towards her estate for inheritance tax purposes. No other tax on gifts in the UK.

Done nothing wrong whatsoever, don't worry!

mgdavid

Masomnia wrote: »

Tax implications are if she dies, in which case anything she gifts you within 7 years of her death could count towards her estate for inheritance tax purposes. No other tax on gifts in the UK.
Done nothing wrong whatsoever, don't worry!

Not so; please see here:
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

The 'regular gift' exemption should cover the OP's situation.
In addition you can give away £3000 lumpsum pa with no tax liability whatsoever. Plus other smaller exemptions for wedding gifts etc.

pjcox2005

It's even less risky than that, any gifts given out normal income aren't even considered for Inheritance tax purposes i.e. 7 year rule mentioned above.

So no concern on tax at all from what you've outlined in your post.

Taken from HMRC website:

"Regular gifts or payments that are part of your normal expenditure

Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.
These include:

• monthly or other regular payments to someone
• regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
• regular premiums on a life insurance policy - for you or someone else

You can also make exempt maintenance payments to:

• your husband, wife or civil partner
• your ex-spouse or former civil partner
• relatives who are dependent on you because of old age or infirmity
• your children, including adopted children and step-children, who are under 18 or in full-time education "

Masomnia

mgdavid wrote: »

Not so; please see here:
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

so you can give away £3000 pa with no tax liability whatsoever. Plus other smaller exemptions for wedding gifts etc.

To be fair I did say 'could' count.

JustAnotherSaver

Thanks for the feedback.

To get back in on the thread quickly before the disagreement escalates ....

What about loaning to a sibling? I read the link, but tbh some of it hurts my head. Yes i tried to take it in.

The reason i'm asking is if you've seen any of my recent threads, obviously related to my deposit on the house we've gone for. This is questioned by the bank which is fine as it's all been hard graft saving. I can also explain why i've transferred £1,000 between accounts, all done legally.
They haven't yet asked, but on my statement it says i've paid a sibling an amount of money. Without logging back on to my online bank, i think in one month statement, it was £1000 split between 2 transfers on 2 dates & in another 1 of the 3 months it was £800 on its own, totalling £1,800 over 3 months.

Reason for this is we have hit out deposit target & we were closing in on a house. We were happy having reached our target so were finally relaxing a little & instead of not allowing ourselves anything, we were spending a little (within our means) & enjoying life a bit before we say goodbye to this big wad of cash. One of the things i spent on was loaning my sister the above amount for a car as her car is on its last legs.
As said - this is a loan & when she can, she'll pay me back.

Just wondering if this would still be ok, or whether the amount is too much (i noticed the mention of £250 on that link)?

The reason i ask is because you read on these forums about people trying to hide stuff & the knock on effect of that & it's a bit concerning about how innocent behaviour can come across as the opposite.

We've been waiting on this weekend passing before we get some sort of feedback & basically we're fretting that by trying to help my sibling out, we've perhaps shot ourselves in the foot as it may look suspicious.

We're perhaps overreacting, but you can't help but think everything is going to go wrong when you want it to go right so much.

grey_gym_sock

a loan is not a gift, so there's no inheritance tax implication (so the £250 limit doesn't come into it).

if a mortgage company looks at your bank statement and asks about this, their only concern would be to wonder if it's some kind of regular outgoing (so you'll have less money to pay the mortgage). if asked, you can explain it's a 1-off loan to a sibling, and not a regular thing.

mgdavid

Masomnia wrote: »

To be fair I did say 'could' count.

and to be fair, you were wrong.
Why do people guess at answers and give vague information when it's a matter of a few seconds to use google and establish the FACTS?

Masomnia

mgdavid wrote: »

and to be fair, you were wrong.
Why do people guess at answers and give vague information when it's a matter of a few seconds to use google and establish the FACTS?

You're the one assuming you are in possession of all the facts and guessing.

We don't know what other gifts there have been, or what other gifts there may be in the coming years.

So, the £3000 allowance may mean nothing is owed, it may not. The gifts given could form part of her estate, or they might not.

The OP needs to know:
-There is no tax on gifts.
-There may be implications with regards to inheritance tax.

Beyond that we're guessing.

Any

OP there is no immediate tax on cash gifts.
The money is yours, you earned it one way or another and payed income tax on it (or CGT or whatever) when you earned it.
If you want to GIVE it to someone, a man on the street, if it is half a million, it is completely just your problem and government doesn't have entitlement to any tax.

THE ONLY tax that can affect cash gifts is inheritance tax, and for that someone has to die first!