Tax and gift of £60k

Ricman

My dad wants to give me as a gift £60k so that he can see me enjoy it whIle he is alive. However he doesn't understand the tax implication for both of us and the 7 year rule.
Will I get taxed initially on the £60k ?
He lives in a small house and he said if he was to pass away today including the £60k his estate would be worth £230k so he reckons I won't have to pay any inheritance tax or any tax at all on this £60k and in fact on his all estate.

Is he correct and do I need to pay any tax on the £60k is he gifted it me say tomorrow ?

Thanks
Lucky son

zygurat789

Ricman wrote: »

My dad wants to give me as a gift £60k so that he can see me enjoy it whIle he is alive. However he doesn't understand the tax implication for both of us and the 7 year rule.
Will I get taxed initially on the £60k ?
He lives in a small house and he said if he was to pass away today including the £60k his estate would be worth £230k so he reckons I won't have to pay any inheritance tax or any tax at all on this £60k and in fact on his all estate.

Is he correct and do I need to pay any tax on the £60k is he gifted it me say tomorrow ?

Thanks
Lucky son

No one pays any tax on gifts made or received.
You will never have to pay IHT but your estate might. Your father's estate is too small to incur any IHT liability.

xylophone

My dad wants to give me as a gift £60k so that he can see me enjoy it whIle he is alive.

Which is fine - you will not have to pay tax on the gift at the point of receipt - you may, of course, be subject to tax on income you may earn on it, depending on your tax status.

It would appear to be the case that your father's entire estate is below the IHT level. http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

Just one caveat - is your father currently fit and well and not in receipt of any means tested benefits?

http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

(If a person deprives himself of capital in order to increase the amount of benefit he get, he can be treated as if he still had that capital (this is called ‘notional capital’). This might occur if he gave money away or bought expensive items in order to reduce his capital.)

Ricman

I plan to pay off my mortgage and buy a new car so I don't think I will be taxed on it via any income from it.

Yes he is fit and well and does'nt get any benefits.

However, he may one day end up in a care home, who knows but at the moment he is 86 and playing 9 holes of golf, 3 times a week. I will keep my eye on the care homes issue

kidmugsy

Ricman wrote: »

I plan to pay off my mortgage.... I will keep my eye on the care homes issue

Just in case the business ever comes up and you feel a need to return all or part of the money to him, it might be worth establishing whether yours is the sort of mortgage where later on you can re-borrow overpayments if you want to. If so, perhaps don't pay it all off: just pay it down until there's, say, £1000 outstanding. That would give you lots of flexibility at little or no cost.

Cook_County

I think deprivation of assets must be important considering his age.

I hope/assume he has drafted an EPA or LPA?