giving money away

willywonka1

Hi there, I dont get this One either,


If my Mother has £10 or a £100000 in the bank, can She give it to me without anyone paying tax?

Willy

bowlhead99

If she is giving you money because you are her employee, then it would be taxable.

If she gives it to you as interest on a loan, then it would be taxable.

If she just gives it as an outright gift, it's not "income" for the purposes of income tax.

So the only type of tax that could be relevant is inheritance tax, which is a tax paid based on the total assets someone has when they die, and for that calculation you have to include assets given away in the last few years before the person died.

So in most cases of giving or getting a gift, there are no taxes. However, if you give money away just to help get (or avoid giving up) means-tested benefits, they can still treat you as having not given away the money. Avoiding inheritance taxes, or reduction of benefits, seem to be a common reason that people give money to their children, beyond just wanting to help them out

colsten

google 'deprivation of assets'

mike88

colsten wrote: »

google 'deprivation of assets'

There is an annual gift allowance of £3000 meaning no tax is payable on an estate in respect of gifts made up to that value in the previous 7 years. However, it is also possible for gifts to be made as part of ‘normal expenditure’ This exemption allows you to give away money from surplus income, providing the gift doesn’t reduce the gifters standard of living, is not from capital and forms some pattern of regular spending. A good test is if the money comes from a current account. However, I don't think the original question relates to deprivation of assets.

Steve_xx

mike88 wrote: »

There is an annual gift allowance of £3000 meaning no tax is payable on an estate in respect of gifts made up to that value in the previous 7 years. However, it is also possible for gifts to be made as part of ‘normal expenditure’ This exemption allows you to give away money from surplus income, providing the gift doesn’t reduce the gifters standard of living, is not from capital and forms some pattern of regular spending. A good test is if the money comes from a current account. However, I don't think the original question relates to deprivation of assets.

In addition to that, if you didn't use last years £3000 gift allowance I do believe that you can carry it forward to this year, thereby allowing you to give £6000 in this year.

noggin1980

willywonka1 wrote: »

Hi there, I dont get this One either,


If my Mother has £10 or a £100000 in the bank, can She give it to me without anyone paying tax?

Willy

The way I understand it is your mum can gift you any amount she chooses along as it doesn't reduce the quality of life she currently has and that she doesn't die in the following 7 years (or some inheritance tax may be due on it, though even if she does die gifting it may well reduce the amount that needs to be paid depending how long she lived) and the money isn't being gifted to try and avoid paying care costs etc.

You can't give away 100k and say I have no money so I need help paying for care.

Steve_xx

noggin1980 wrote: »

The way I understand it is your mum can gift you any amount she chooses along as it doesn't reduce the quality of life she currently has and that she doesn't die in the following 7 years (or some inheritance tax may be due on it, though even if she does die gifting it may well reduce the amount that needs to be paid depending how long she lived) and the money isn't being gifted to try and avoid paying care costs etc.

You can't give away 100k and say I have no money so I need help paying for care.

Yes, I'd say that's right. Though who would police such things as a reduction in her quality of life, I do not know.


Also, it's worth mentioning here that the Conservatives have mooted that they are likely to increase the Inheritance Tax Allowance up to £1m. That may have a huge beneficial impact on a lot of people.

Archi_Bald

Steve_xx wrote: »

Though who would police such things as a reduction in her quality of life, I do not know.

Unless she starts claiming means-tested benefits or local authority care, nobody would have any interest in how much money she has recently given away.

bowlhead99

mike88 wrote: »

However, I don't think the original question relates to deprivation of assets.

I'd only mentioned it in my initial response because OP's only other thread was one about whether their ISA or ISA income would affect benefits.

Steve_xx

bowlhead99 wrote: »

I'd only mentioned it in my initial response because OP's only other thread was one about whether their ISA or ISA income would affect benefits.

An interesting aside to the OP's original question is that if his or her mother were to add him/her as a joint account holder, then what?

xylophone

An interesting aside to the OP's original question is that if his or her mother were to add him/her as a joint account holder, then what?

In general, she would have been held to have gifted him half the money in the account and half the interest would be taxable as his.

But HMRC recognises that there may be circumstances where this would not be the case - see http://www.hmrc.gov.uk/manuals/saimmanual/SAIM2420.htm

In general, in terms of death of one of the account holders, the banks setting up the account regard the money in the account as passing by survivorship outside any will- however, HMRC would have regard to the source of the funds in the account.

https://www.gov.uk/valuing-estate-of-someone-who-died/assets