The status of 'gifted money'....?

lovecraft

Myself and my partner are lucky enough to receive regular financial help from my Mother in Law. This comes in two forms. Every year she gives us a lump sum, depending on how her investments have performed that year, which can range from £5000 to £20,000. Secondly, out of her private pension, she gives us £400 every month. This is all done via her financial advisorand declared in her accounts. Given that this is money gifted to us are we under an obligation to declare this when we apply for tax credits?

heartbreak_star

I think yes, as it's a regular income.

HBS x

Rodders53

https://www.gov.uk/claim-tax-credits/what-counts-as-income

https://www.gov.uk/guidance/tax-credits-working-out-income

Doesn't mention regular gifts from a relative out of their own income...

Gifts are not taxable income...

But you'd be wise to ask HMRC to be 100% sure if they affect tax credits rather than rely on the views of random strangers on an internet forum.

dippy3103

Declare it, if it doesn't count then no harm done. That way everything is lawful

Jenniefour

lovecraft wrote: »

Secondly, out of her private pension, she gives us £400 every month.

This might be a problem. Your MIL is, in effect, providing you with a regular income of £400 per month, and because it's a regular amount paid monthly HMRC might well view this as taxable income, and could then be taken into account for the purposes of calculating tax credit. MIL's accountant should be able to tell you.

HMRC link provided by Rodders is not a definitive list, it says "includes".

zagfles

Gifts don't need to be declared for tax credits. As long as they are genuine gifts and not disguised remuneration.

getmore4less

Looks like IHT mitigation on her part using the regular gift from income exemption, smart move.

gifts are not earned income.

there is a point where if they are not spent they become capital/savings and effect those means tested benefits.

Alice_Holt

Jenniefour at post 5 is not quite correct.

As zagfles and Rodders state genuine gifts are not taxable income for the receiver of that gift.
EDIT: And getmore4rless

Tax Credits do take into account interest received on savings, so you will need to report this.
See: http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/investment-income/

https://www.justanswer.com/uk-tax/6i6uh-cash-gifts-count-income-when-claiming-child-tax-cred.html

The tax implications will rest with your MIL as her gifts that are worth more than the £3000 allowance may be subject to Inheritance Tax.
https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax

However IHT is complicated, gifts out of regular income, for instance, are allowed. The one off payments are likely to be more of an issue and will be subject to PET rules.

Jenniefour

Alice Holt. You're right, I've just been looking it up myself. Makes no difference whether gifts are paid monthly. Thanks.

getmore4less

Alice_Holt wrote: »

Jenniefour at post 5 is not quite correct.

As zagfles and Rodders state genuine gifts are not taxable income for the receiver of that gift.
EDIT: And getmore4rless

Tax Credits do take into account interest received on savings, so you will need to report this.
See: http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/investment-income/

https://www.justanswer.com/uk-tax/6i6uh-cash-gifts-count-income-when-claiming-child-tax-cred.html

The tax implications will rest with your MIL as her gifts that are worth more than the £3000 allowance may be subject to Inheritance Tax.
https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax

However IHT is complicated, gifts out of regular income, for instance, are allowed. The one off payments are likely to be more of an issue and will be subject to PET rules.

wrong way round "regular gifts from income"

They are regular(annual) and from income(investment) covered by the rules.

Sea_Shell

Sorry, Just being nosey.... are you an only child or do you have siblings? and if so, are you all receiving such generous gifts?