Gifting Money To Children

Bookerviking

Hi All,
I'd be grateful for advise regarding the tax implications of gifting money to my two adult children.
I have a disability, and should I ever need to go into care, I would like to ensure that my children receive at least some of my money.
I have saved and invested approximately £300,000 plus I own outright a small property worth £200,000.
Is it possible to arrange to give my children an amount of money per annum whilst I am in reasonable health?
With regard to the investments mentioned above,about £100,000 of this is in stocks and shares and cash ISA's.
Many thanks in advance.

le_loup

In order to evade care costs?
No.

westy22

Well, any one of us could have to go into care 'in the future' whether we have a disability or not. If the OP is currently in reasonable health with no expectation of needing to go into care in the foreseeable future, then their disability should not prevent them gifting money to their children.

There is no gift tax in the UK so you are free to give away whatever you want, whenever you want, with no tax implications for the receiver of the gift.

For the purposes of avoiding Inheritance Tax (IHT) you will need to live for 7 years to remove the tax liability and, of course, you need to ensure that you are not falling foul of any Deprivation of Assets legislation. The fact that you are disabled does not, in itself, make you any different from any other person so you need to read up on Deprivation of Assets.

The proposed changes to IHT will benefit you before the 7 years cuts in anyway.

Bookerviking

No,I don't believe in evading tax.I wish to legally make financial gifts to my children while my health holds up.
Thank you for your reply.

Bookerviking

Hi Westy 22
Thank you for your fulsome reply.
I wasn't thinking of IHT,I am a widower and I understand that I can include my late wife's tax allowance in any IHT calculations.
I was merely thinking of cashing a few of my ISA's to give to my children to help with house deposits.
Thank you again.

xylophone

With regard to IHT, are you a widower? If so there is the spouse exemption.

There is also this.

http://www.independent.co.uk/news/business/news/budget-2015-live-emergency-uk-inheritance-tax-threshold-raised-above-1m-for-couples-by-new-family-homes-allowance-10370076.html

As for care costs, you do not have any immediate prospect of needing care so gifts to your children would not be unreasonable.

Perhaps you might consider a couple of thousand each on Christmas and birthdays and/or regular contributions to their pensions?

caper7

Unless things have changed, you can gift £3000 a year without any IHT implications (ie not having to survive for 7 years etc).
If you have not done this before you are allowed to give £6000 in the first year, then £3000 per year subsequently.
At least this certainly used to be the case.

https://www.gov.uk/inheritance-tax/gifts

le_loup

Bookerviking wrote: »

I have a disability, and should I ever need to go into care, I would like to ensure that my children receive at least some of my money.

I don't know how I could have misinterpreted this statement.

getmore4less

No IHT issues if you have full transferable nil rate band.

Deprivation is very subjective. but if there is no imminent need and the longer term needs are considered then you can change your asset base.

The obvious thing is to avoid any increase in wealth(not so easy with a house) by using up all income including any you can generate from investments.

I don't know of any case where deprivation applies when all you do is don't save.

Another measure is not so much how much you give away but how much you keep back.

With a £500k asset base it would not be unreasonable to offload/spend some of it as long as you maintained a lifestyle from income and though that £X would be sufficient to provide care.

How much is reasonable is a guess,
£50k to help the kids buy houses IMO would not be a problem
£100k(leaving £400k) still seem reasonable and justifiable to me.
(others will disagree but ultimately it won't matter till the relevant authority decides to have a look)

Many are comfortable their families will help out and in many cases provide the care should it be needed.

thenudeone

You can give any amount to anyone in the Uk without any tax being payable on the gift, but if you die within seven years, a proportion of the value (on a sliding scale) will be added back in to your estate for IHT purposes. The worst case scenario is that you pay the same IHT as you would have if you hadn't given the money away.
Giving away a property which you don't live in may create a CGT liability.

Deprivation of assets is a separate matter and one you need to be careful of. If you really want to create a regular income for your kids you could buy them an annuity.

With a portfolio of savings and assets of your size, you should be getting paid-for professional advice from an expert. (Yes - I know some of the MSE regulars are professionals in their field)