Tax on gift from friend

ukste

getmore4less wrote: »

Tax in the UK is an honour system you tell HMRC what income, capital gains or other taxes are due they tax you.

failures involve penalties.

They have way to cross check what you tell them is correct

OK I understand. The whole point of my question here was to clarify whether or not what was being proposed was going to pose any tax related issue for either of us. It seems that the consensus is that it wont do.

xylophone

IHT is never paid by the donee. It is paid by the estate and I am not being pedantic.

See http://www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm

"When a beneficiary or a 'donee' has to pay Inheritance Tax

If the executor or the trustees can’t pay the Inheritance Tax, the beneficiaries or 'donees' (recipients of gifts made during a person's lifetime) may have to pay it. A beneficiary or donee only has to pay Inheritance Tax in this case if:
they receive a share of an estate after a death
they receive a gift from someone who dies within 7 years of making the gift
they benefit from assets in a trust at the time of death or receive income from those assets
they are the joint owner - other than a spouse or a civil partner - of a property
Here are some examples of when a beneficiary or donee might have to pay Inheritance Tax."

payless

Exactly - I didn't include all info as it did not add to the OP situation, rather just to state that the previous post was not totally correct.

purdyoaten

xylophone wrote: »

See http://www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm

"When a beneficiary or a 'donee' has to pay Inheritance Tax

If the executor or the trustees can’t pay the Inheritance Tax, the beneficiaries or 'donees' (recipients of gifts made during a person's lifetime) may have to pay it. A beneficiary or donee only has to pay Inheritance Tax in this case if:
they receive a share of an estate after a death
they receive a gift from someone who dies within 7 years of making the gift
they benefit from assets in a trust at the time of death or receive income from those assets
they are the joint owner - other than a spouse or a civil partner - of a property
Here are some examples of when a beneficiary or donee might have to pay Inheritance Tax."

Indeed - it seems that one cannot be too careful with words or assume, in this case, that the estate is able to pay IHT.

Thanks

agrinnall

purdyoaten wrote: »

Indeed - it seems that one cannot be too careful with words or assume, in this case, that the estate is able to pay IHT.

Thanks

However, in this case you're right because it was established way back that the estate is not large enough to be liable to IHT anyway, which is why all the advice that there's no tax liability for the gift on either party is correct.

laidbackgjr

You (or your estate) could be liable for tax if this £30k increases your estate to over £325k and therefore brings inheritance tax into play if you were to die before 7 years had passed after gifting the £30k back to your friend.

ukste

laidbackgjr wrote: »

You (or your estate) could be liable for tax if this £30k increases your estate to over £325k and therefore brings inheritance tax into play if you were to die before 7 years had passed after gifting the £30k back to your friend.

Yes, it's a good and valid point of course.

mrputney08

Regardless of IHT does anyone know if he has to declare it? Only if you are SE you have to declare all income on the income tax form. Probably not relevant here as he is not SE and it is not classed specifically as 'income'?. Just though I'd cover all posts tho'..

Savvy_Sue

No, the OP would not have to declare a gift.

Although if he decides to go ahead despite what we've said, getting something on paper would be a good plan.

zygurat789

ukste wrote: »

Yes both basic rate taxpayers.

How would it come to the attention of HMRC?

Deposit takers have to report interest paid to HMRC, a sudden appearance on this list could prompt some questions