Tax evasion or tax avoidance?

AKRev01

Can I gift a lump sum of money to my girlfriend to save for a few years so that I don’t have to pay tax on the interest? (As it exceeds my personal allowance)

After a few years we’d like to use the money to buy a house together anyway so we use it for the deposit then.

I of course wouldn’t want to do this if it’s classed as tax evasion or if there’s any chance I could be hit with a tax bill (or worse!) by HMRC later down the line, so would appreciate some guidance.

p00hsticks

you can gift it to her, but there can't be any strings - the money is hers to do what she wants with so don't do it if you're not comfortable with her spending it all or using it to elope with someone else.

xylophone

You can give money to your girlfriend but it then becomes hers absolutely.

You cannot insist that she returns the money or uses it for any particular purpose.

Should you die before seven years has elapsed, there are potentially IHT implications for your estate.

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

AKRev01

Ah that’s helpful thank you.

Yeah appreciate that’s a big risk in that things could turn sour and then the money is no longer mine, but we’ve been together a few years and we are very much on the same level

BoGoF

Must be a lot of money if you are contemplating this. How much interest are we talking here? Does your girlfriend work?

Andy_L

AKRev01 wrote: »

Ah that’s helpful thank you.

Yeah appreciate that’s a big risk in that things could turn sour and then the money is no longer mine, but we’ve been together a few years and we are very much on the same level

Have you written wills? If she dies intestate after the gift you wont get it back

AKRev01

It’s not a particularly big sum - however if we can legally not pay tax on it for the next three years by using her ISA allowance/personal allowance then that would help us out with the deposit (every little helps!). She does work.

We’ve not written wills. We are in our mid-20s and so never given it much thought. Is this something I should consider even though I’m still in my 20’s?

John_G_Jones

AKRev01 wrote: »

Can I gift a lump sum of money to my girlfriend to save for a few years so that I don’t have to pay tax on the interest? (As it exceeds my personal allowance)

After a few years we’d like to use the money to buy a house together anyway so we use it for the deposit then.

I of course wouldn’t want to do this if it’s classed as tax evasion or if there’s any chance I could be hit with a tax bill (or worse!) by HMRC later down the line, so would appreciate some guidance.

What a bizarre question. If you don’t want to receive interest just put it in a current account, but why forego interest just to avoid the tax on it?

Mojisola

AKRev01 wrote: »

It’s not a particularly big sum - however if we can legally not pay tax on it for the next three years by using her ISA allowance/personal allowance then that would help us out with the deposit (every little helps!).

That will be a Help to Buy ISA?

Nice to get the bonus to add to your savings.

BoGoF

What is 'not a particularly large sum'..?

If the interest is not over £1000 and you are a basic rate taxpayer then you will not pay tax on it anyway.

AKRev01

Andy_L wrote: »

Have you written wills? If she dies intestate after the gift you wont get it back

BoGoF wrote: »

Must be a lot of money if you are contemplating this. How much interest are we talking here? Does your girlfriend work?

BoGoF wrote: »

What is 'not a particularly large sum'..?

If the interest is not over £1000 and you are a basic rate taxpayer then you will not pay tax on it anyway.

I’d rather not state the exact figure but I understand the personal allowance thresholds on interest