Tax on gift from friend

ukste

My friend is 63. He's got £30,000 that he wants me to hold on to for him. He's well, but has fallen out with one of his three living sisters. He's worried that if something happens to him that without a will that his errant sister would claim a portion of the money. He may well make a will at some point but for now he has asked me to hold onto his money.


My question relates not to the ins and outs of him not having a will and what might happen if he died while I still had the money etc.


Rather, my concern is centred on any tax implication if I held the money for him. Would there be a tax burden on me if I suddenly got the money or indeed on him if he gives it to me?


This money is all his lifes worth. He does not have property or any other estate. I think I understand that as his total estate is worth £30,000 then there would be nothing to worry about with inheritance tax. But there might be other implications that he needs to consider.


Does anyone know of anything?

Savvy_Sue

Your friend would do better to make a will immediately.

If he 'gives' you the money to look after, there are various potential implications.

1. You decline to give it back when asked.

2. You die and your estate declines to give it back / doesn't know it's his not yours.

3. You find yourself in a situation where you need to claim means-tested benefits and appear to have £30,000 which you say isn't yours.

4. You give it back, he spends it and then dies, and his sisters accuse you of hiding it from them.

And so on ...

wacko911

If his estate is worth 30k and he dies there is no tax due.

But lots of really good points raised above.

getmore4less

It does not work.

If he gifts it to you then if you die he loses it.

If it is a loan then you have to give it back if he dies and the sister gets her share.

agrinnall

The best option is for you simply to refuse to take it and tell him to make a will. That is the only way in which he can be sure that the money will be distributed as he wants. If he won't do it then there's no reason why the problem should become yours.

ukste

Thanks for the very useful responses folks. It is indeed food for thought and the points raised are worthy of a good deal of consideration.


However, can I reiterate that I am interested to learn if there are any tax implications for either of us in doing this?

pjcox2005

No tax implications-

Receipt of a gift by you is not subject to any tax.

The gift given by the individual could be subject to inheritance tax if he died within 7 years, but given that his level of assets are considerably below the inheritance tax threshold then this won't be relevant for him.

Although as above, I would still suggest a will is the right way to go.

ukste

pjcox2005 wrote: »

No tax implications-

Receipt of a gift by you is not subject to any tax.

The gift given by the individual could be subject to inheritance tax if he died within 7 years, but given that his level of assets are considerably below the inheritance tax threshold then this won't be relevant for him.

Although as above, I would still suggest a will is the right way to go.

Thanks for this information. Yes I agree with you regarding the making of a will.

I knew that there was a 325k limit for inheritance tax purposes and that he wouldn't breach that. My main concern is that there might have been a Capital Gains Tax implication or even an income tax implication for me.

patanne

If it earns any interest whilst in your care you will be responsible for the tax on the interest although it may well be deducted from the interest - it all depends on where you keep it. Are you 100% certain he is not using you to hide the money so that he can claim benefits. Less than £100 for what should be a very simple will would seem a much more sensible way to go.

ETA: If you are a higher rate tax payer you will have additional tax to pay too!

ukste

patanne wrote: »

If it earns any interest whilst in your care you will be responsible for the tax on the interest although it may well be deducted from the interest - it all depends on where you keep it. Are you 100% certain he is not using you to hide the money so that he can claim benefits. Less than £100 for what should be a very simple will would seem a much more sensible way to go.

ETA: If you are a higher rate tax payer you will have additional tax to pay too!

Yes I take your point and understand that interest will be deducted at source if I bank it for him.


He's in full time work and on no benefits at all. He lives alone and so gets a quarter reduction off of his Council Tax, but other than that he gets no benefits as such.

ukste

saad800 wrote: »

Gifts are exclusive from all taxes.

Many thanks. That's good to hear.