Tax on giving parents money

bailey2658

Hi I'm after a bit of advice please. 5 years ago we bought a house and my parents gave us the deposit, £25k. At the time there was no intention to pay it back however we have now found ourselves in the financial position where we can pay it back and are unsure if we can just pay them back 25k and if there are any tax implications on this for us or them? There's lots of information online regarding gifting to your children but not gifting back to your parents. Also when they first gave us the money it was with a letter to the mortgage company stating that it was a gift, although we are now with a different mortgage provider im not sure if this affects anything either?
Any help/ advice would be useful as cant seem to find much online. Thanks.

Pixie5740

There is no gift tax in the UK.

bailey2658

Pixie5740 wrote: »

There is no gift tax in the UK.

So no-one bats an eyelid if we just transfer them the money back? Sounds too easy!

StopIt

Why don't you pay the £25k towards your mortgage via overpayment?


If/when you sell, then give the £25k.


Either way, no, no-ones really going to be bothered here I wouldn't think although this is not legal or financial advice!

enthusiasticsaver

The only way this could possibly be an issue is if your assets are over the inheritance tax threshold and you die within the next 7 years. Then the £25k could be subjunctive to inheritance tax. Otherwise no tax payable.

bailey2658

StopIt wrote: »

Why don't you pay the £25k towards your mortgage via overpayment?


If/when you sell, then give the £25k.


Either way, no, no-ones really going to be bothered here I wouldn't think although this is not legal or financial advice!

Good idea but not looking to sell at all really until we are much older, my parents are nearing retirement age and dont have huge savings so would like to repay really. However they are self employed and are worried theyll pay income tax if they suddenly get a lump sum in their account, i wondered whether it'd be better to pay back in stages rather than all at once.

bailey2658

enthusiasticsaver wrote: »

The only way this could possibly be an issue is if your assets are over the inheritance tax threshold and you die within the next 7 years. Then the £25k could be subjunctive to inheritance tax. Otherwise no tax payable.

Thanks for the info, I feel nervous like banks are watching everything you do with their money and wont be happy that we are paying back what was effectively a gifted deposit..... maybe theyve got bigger things to worry about!?
good to know about the inheritance tax, not sure if we are over the threshold but hopfeully we'll still be here in 7 years!

ViolaLass

bailey2658 wrote: »

Good idea but not looking to sell at all really until we are much older, my parents are nearing retirement age and dont have huge savings so would like to repay really. However they are self employed and are worried theyll pay income tax if they suddenly get a lump sum in their account, i wondered whether it'd be better to pay back in stages rather than all at once.

It's not income.

They won't need to declare it or pay tax on it just as you didn't when they gave it to you.

Alter_ego

Presumably parents are not on any means tested benefits?

bailey2658

Alter_ego wrote: »

Presumably parents are not on any means tested benefits?

nope none at all.

StopIt

bailey2658 wrote: »

Good idea but not looking to sell at all really until we are much older, my parents are nearing retirement age and dont have huge savings so would like to repay really. However they are self employed and are worried theyll pay income tax if they suddenly get a lump sum in their account, i wondered whether it'd be better to pay back in stages rather than all at once.

Silly question, have you told them about this, and do they even want it?


They may appreciate the effort, but may you rather get closer to being mortgage free than worrying about giving them the money. If the money was a gift and they literally have no idea you're planning on doing this, maybe giving them a holiday/large gift as a way of saying thanks rather than paying everything back?