“Gifting” a sum of money / tax implication

D3P0

Hi all,

If a parent wanted to gift their son / daughter a sum of money for deposit assistance on a house I.e 15k what are the implications of tax on that money?

Reed_Richards

If the parent dies within 7 years after making the gift, it is potentially liable for inheritance tax: https://www.gov.uk/inheritance-tax/gifts . Otherwise I do not believe there are any tax implications.

Aretnap

Gifts in the UK are not taxable. You can give away as much as you like, to whoever you like, and neither you not the recipient have to pay any tax on the money.

As above the one exception is that if you die within 7 years of making the gift then subject to annual allowances it may still be counted as if it was part of your estate for inheritance tax purposes. This is basically to prevent people from avoiding inheritance tax by giving away everything they own on their death beds. It is only an issue if your estate is likely to be large enough to qualify for IHT.

The other exception would be where the "gift" is actually a payment for good or services, so if your plumber fixes your boiler for free and the next day you happen to give him a gift of £200 HMRC are unlikely to be impressed, But that's not really an issue with a parent/child gift.

Heedtheadvice

In simplistic terms...as above.


There might be 'complications' if the 'gift' was a Gift with Reservation where the original gift was not an outright gift but one for which a benefit was still attached:


typically things like gifting a house (or part of) but still residing in it. That is then potentially taxable for the deceased's estate; or


a gift that puts the giver into a situation where care might be needed and the funds have been given away. Not strictly a tax but can impact on help with care fees, recovery of help costs by councils that can affect the giver and receiver sooner or later. Depends very much on circumstances but something like giving away capital when an illness has just been diagnosed or property equity release resulting in the gift, prior to or during the care, could be such cases.






But yes a straight gift with no complications is not taxeable!