Repaying 'gift' from Mum and Dad

gimmetheloot

Suppose my parents were to gift me some money for a deposit, then around five years later I were to gift them the same money back, would there be tax implications?

What if the amount I gifted back were higher than originally gifted to me?

I presume the taxman would need an explanation in either instance but would anything actually be due?

Thanks in advance.

foxy-stoat

Nothing to do with HMRC if your parents gift you money, and you gift them money a few years later.

Assuming everyone lives 7+ years and no one goes into care that requires state funding.

getmore4less

Apart from the obvious, that these are not gifts but a loan in disguise, the chances are you will get away with it.

System

As long as you're not planning on dying in the next 7 years you'll be OK.

sal_III

I would be more concerned about committing a fraud by declaring a loan as a gift in a mortgage application, than HMRC demanding tax for money transfers between relatives.

00ec25

gimmetheloot wrote: »

I presume the taxman would need an explanation in either instance but would anything actually be due?

HMRC works on the basis you can do whatever you want until they catch yo, then they will check whether what you did was legal.
HMRC do not require explanations up front - that is why it is called self assessment. You do what you are doing now, you educate yourself on the rules and then take a gamble you have understood correctly when you submit your self assessment. If you don't have to do a tax return, you'll never how right or wrong you are unless HMRC have a reason to check up on you .

clearly your intention is to evade tax on the "higher" amount return to parents.
proving intent is next to impossible.
the gift from your parents is a gift
the (higher) gift from you to them is unrelated to the earlier gift, has nothing to do with the fact you are now in a position where you have disposable income of your own and in no way, shape or form does it involve you repaying their original loan to you with interest.

then again you could just tell the truth?

gimmetheloot

00ec25 wrote: »

HMRC works on the basis you can do whatever you want until they catch yo, then they will check whether what you did was legal.
HMRC do not require explanations up front - that is why it is called self assessment. You do what you are doing now, you educate yourself on the rules and then take a gamble you have understood correctly when you submit your self assessment. If you don't have to do a tax return, you'll never how right or wrong you are unless HMRC have a reason to check up on you .

clearly your intention is to evade tax on the "higher" amount return to parents.
proving intent is next to impossible.
the gift from your parents is a gift
the (higher) gift from you to them is unrelated to the earlier gift, has nothing to do with the fact you are now in a position where you have disposable income of your own and in no way, shape or form does it involve you repaying their original loan to you with interest.

then again you could just tell the truth?

Thanks. I'm not trying to evade tax though I'm trying to understand if there would be a tax liability in this instance? Are you saying that the 'interest' would be taxable?

The money would ostensibly be a gift for mortgage reasons.

PasturesNew

The problem isn't in you doing this, to get round the fact mortgage lenders wouldn't give you a mortgage if you said you'd repay it. The only problems come when something changes and somebody wants the money.

e.g. you fall out with them: they want the money. You move in a bf who then wants "his share" of the increased value: he wants the money. A sibling's aggrieved they want the money and you haven't paid mum/dad back yet: sibling wants the money. Parents fall on hard times/split up, argue and somebody wants the money back now: parents want the money. You lose your job and can't afford to pay them back, they'd ear-marked that money they expected for something else and start nagging you: parents want the money.

That is the only fly in the ointment - changes in circumstances.

00ec25

gimmetheloot wrote: »

Thanks. I'm not trying to evade tax though I'm trying to understand if there would be a tax liability in this instance? Are you saying that the 'interest' would be taxable?

of course it would be if you told the truth

you intend to give them more than they gave you. The word applicable to the "extra" is either interest or profit, and both are taxable.

would HMRC ever find out if you stick with your "gift" (without the "") story .....doubt it, but as already pointed out, there are other repercussions

gimmetheloot

00ec25 wrote: »

of course it would be if you told the truth

you intend to give them more than they gave you. The word applicable to the "extra" is either interest or profit, and both are taxable.

would HMRC ever find out if you stick with your "gift" (without the "") story .....doubt it, but as already pointed out, there are other repercussions

Ok got it, thanks

PasturesNew wrote: »

The problem isn't in you doing this, to get round the fact mortgage lenders wouldn't give you a mortgage if you said you'd repay it. The only problems come when something changes and somebody wants the money.

e.g. you fall out with them: they want the money. You move in a bf who then wants "his share" of the increased value: he wants the money. A sibling's aggrieved they want the money and you haven't paid mum/dad back yet: sibling wants the money. Parents fall on hard times/split up, argue and somebody wants the money back now: parents want the money. You lose your job and can't afford to pay them back, they'd ear-marked that money they expected for something else and start nagging you: parents want the money.

That is the only fly in the ointment - changes in circumstances.

All potential pitfalls you're right so we'd each have to be going into eyes wide open

Thanks all

System

You can gift whoever, whatever whenever you want to. It’s your money do what you want and cross the bridge IF it even comes