Gift of £30K

bowf

My mother wants to give us £30K, so she can see us enjoying it before she dies.
Are there any tax implications here?
Her entire estate, house + savings etc wouldn't go over the inheritance tax threshold, nowhere near.

msallen

No tax implications if IHT isn't an issue. However there may be issues around deliberate deprivation of her assets if she needs any means tested benefit (including a state funded care home place) any time over the next few years.

Reed_Richards

bowf wrote: »

Her entire estate, house + savings etc wouldn't go over the inheritance tax threshold, nowhere near.

Then no, there are no tax implications (provided this remains so until her death).

bowf

msallen wrote: »

No tax implications if IHT isn't an issue. However there may be issues around deliberate deprivation of her assets if she needs any means tested benefit (including a state funded care home place) any time over the next few years.

That's always a thorny subject, as they have to have reasonable reason to think a care home was on the cards.
As things stand she is sound of mind and body, so it would be hard for them to prove she did to avoid care costs.

Zanderman

bowf wrote: »

That's always a thorny subject, as they have to have reasonable reason to think a care home was on the cards.
As things stand she is sound of mind and body, so it would be hard for them to prove she did to avoid care costs.

I'm not sure it's that simple. For example age might be a reasonable factor too. If she's 63 and in good health then a care home is unlikely at present, but if she's 83 and in good health a care home relatively soon might be considered a likely possibility regardless of her current well-being.

bowlhead99

Zanderman wrote: »

I'm not sure it's that simple. For example age might be a reasonable factor too. If she's 63 and in good health then a care home is unlikely at present, but if she's 83 and in good health a care home relatively soon might be considered a likely possibility regardless of her current well-being.

Age alone isn't something that means you can reasonably forsee you'll be looking for state-funded care. The majority of old people don't go into care. They just get to the end of their lives and die (sorry if that sounds blunt).

I have a family member who was 63 and reasonable health almost forty years ago. Cohort life expectancy would have probably been less than 20 years back then, but it's more now. Then a whole two decades later she was 83 with fewer years left in the tank, but still reasonable health. A council would have had trouble making the case that any presents she gave away that year were done with a legitimate expectation of avoiding bearing her own care costs, because there were no particular foreseeable care costs on the horizon, only possibilities - like there are possibilities of pretty much every outcome in life.

Now yet another couple of decades on, she needs care, though still in her own house, and if she sold up and gave the proceeds away to make sure she had low assets to apply for means treated benefits or funded care, it would be much easier for the council to make the case that she was trying it on.

But any deprivation of assets claim starts with the government agency needing to use actual evidence that you were trying to get a benefit by deliberation depriving yourself of your own stuff. The fact that "I'm not as young as I used to be" does not per se put you on dodgy ground.

On the tax side you are fine as there is no gift tax in the UK. Even if you are over the IHT threshold there is no tax to pay at the time of giving it away just because you gave some money away. All that happens is if you die shortly afterwards, the assets are added back to your estate rather than being allowed to be ignored. If the gift hadn't been made the assets would still be in the estate, so, if the person getting the gift was likely to get it out of the estate anyway at the point of death, it's not really a problem to give it early. Giving it away didn't *increase* the tax.

Questions like this often segue into deprivation of assets topics because once someone says "will we pay any tax on the gift" and finds the answer is no, and there's nothing adverse on inheritance tax either, then really a claim of 'deprivation of assets' is the only consequence worth talking about which could be similar in concept to a tax: being the withdrawal of a benefit rather than a charge of tax.

tacpot12

If your Mum does make you this gift, get her to detail the source of the funds in case your bank queries it. She should give as much detail as she can and confirm that it is a gift.