Help for my son

Noah2_2

My son has a very large mortgage (£150K), which he is struggling with, he has 3 kids and a wife to support (she doesn't work). He has a car loan £14K and also has accrued £7K on Credit Card debts.

He has also been recently told that he is being made redundant! all in all he's in a bad way! and I'm worried about his state of mind as he's recently closed right up on me and isn't talking - and I know it's all getting him down.

So what I want to do is relieve some of the pressure - I want to give him
£90K to wipe off his mortage that way he'll have some space to at least breath.

However finance has never been my thing (no interest). Question what issues are there in just giving him the money?
1) am I liable to pay some tax on it (I half remember gifts were £5K tax free???)
2) does he have to pay tax on the gift? i.e. some for of inheritance tax?

See told you I didn't have a clue

Any advice would be greatly appreciated.

Tustastic

Noah2 I don't have any specialist advice on financial gifts but just wanted to applaud you for caring about your son and wanting to help in a practical way.
Why not encourage him to visit this site to see how other people are dealing with financial crises just as big as his - and not going under. If he was struggling before the news of the redundancy, he needs to know that there ARE ways of getting one's finances under conrol.
All the best

basketcase

Noah2 wrote: »

My son has a very large mortgage (£150K), which he is struggling with, he has 3 kids and a wife to support (she doesn't work). He has a car loan £14K and also has accrued £7K on Credit Card debts.

He has also been recently told that he is being made redundant! all in all he's in a bad way! and I'm worried about his state of mind as he's recently closed right up on me and isn't talking - and I know it's all getting him down.

So what I want to do is relieve some of the pressure - I want to give him
£90K to wipe off his mortage that way he'll have some space to at least breath.

However finance has never been my thing (no interest). Question what issues are there in just giving him the money?
1) am I liable to pay some tax on it (I half remember gifts were £5K tax free???)
2) does he have to pay tax on the gift? i.e. some for of inheritance tax?

See told you I didn't have a clue

Any advice would be greatly appreciated.

Someone far more knowledgable about tax than I am will answer these questions. Things that strike me are:

1) Is it the right kind of mortgage to pay off extra or would there be a penalty?
2) Were youplanning to get him to look for a different mortgage with the £90k as a deposit?
3) Paying off the car and/or credit cards for him wouldn't involve tax!
4) Get him to out his SoA on here if he's going to be redundant!

angelavdavis

What a lovely thing to do.

It would be worth you posting this query onto the tax board too as there are some real experts there.

To the best of my knowledge, I believe you are allowed to gift £3000 per year to your children/grandchildren tax-free. Any gifts over this are liable for IHT if you die within 7 years of making the gift.

Inland Revenue states:

Exempt gifts

Gifts that are exempt from inheritance tax. These include

• gifts to individuals more than seven years before death. See potentially exempt transfers
• gifts to spouses or civil partners
• gifts not exceeding £3,000 in any one tax year. See annual exemption
• gifts on consideration of marriage or civil partnership
• gifts to UK charities
• gifts for national purposes
• small gifts
• gifts which are normal expenditure out of income

How long has your son been married? The reason I enquire is that you are allowed to gift a further £5000 to your son for this reason (plus £1000 to your daughter in law).

Inland revenue produce a customer leaflet about it here which provides information.

So, my guess is (assuming your son has been married for some time) that the trick would be to gift equally to your son, daughter in law, and each grandchild £3000 each year! Of course, I am oversimplifying and am not 100% sure that you would be able to do this (perhaps they consider son and wife one entity, etc), so I really suggest you have a go at posting on the other board to see if they can help clarify any exemptions/ conditions.

I don't know if you can put the money in trust that is somehow offset against your son's mortgage to avoid having to pay the tax on it (perhaps multiple trusts that release the 5 x £3000 per year over a period of 6 years??) I guess this is getting into a formal tax consultant type advice.

Spirit_2

Hi, I am sorry to hear of your son's troubles. He is however blessed with a caring mum who has the means to assist him hugely and the desire to 'look after him'. I can understand entirely your priority to support his health.

If he is unable to discuss this with you (in truth I have not been able to discuss my finances with my Mum when we are in tricky times) is he discussing it with his wife?

Please tell him about this site/board, he has anonymity here and can say/ask things on here that he may not say to anyone else, it can be a blessed relief.

His circumstances now are stressful but not hopeless.
Good Luck

Spirit