What are the tax implications of a grandchild receiving a cash gift

JW_69

Hi,
What if any are the tax implications of a very young grandchild receiving a substantial cash gift from a non national (ie not British) grandparent who is domiciled abroad? 
I think it can be any sum but if the donor dies within 7 years there is an inheritance tax implication.
I also understand that tax is payable on any interest accrued on the sum payable by the recipient.
Difficult to get definitive info on this it seems. Can anyone help?
With thanks..

Alter_ego

No tax implications that I know of. Could be money laundering checks. If the donor dies the laws of their country of domcile will apply.

xylophone

 non national (ie not British) grandparent who is domiciled abroad? 

There is no implication for the recipient but does the country of residence of the grandparent impose any kind of tax on the gift?

The "seven year rule"  relates to gifts made by UK residents.

With regard to the gift to the UK resident infant, the child has a Personal Tax Allowance just like an adult and also has the possibility of benefiting from the 0% band on savings income and the personal savings allowance.

Thus, with no other income,  the infant could earn up to £18,500 in interest on a non Junior ISA savings account and any interest earned in a JISA would be tax free.

The infant would also have a dividend allowance for shares held outside a JISA - dividends held within a JISA would be tax free.

Malthusian

What if any are the tax implications of a very young grandchild receiving a substantial cash gift from a non national (ie not British) grandparent who is domiciled abroad? 

I think it can be any sum but if the donor dies within 7 years there is an inheritance tax implication.

It sounds like you are referring to UK Inheritance Tax but you also say the grandparent is domiciled abroad. As Alter_ego says, if they are not UK domiciled the laws of their own country will apply.

I also understand that tax is payable on any interest accrued on the sum payable by the recipient.

It would have to be a very very substantial sum (or an already loaded young grandchild) for a minor to be liable to pay tax on interest, given their personal allowance, personal savings allowance and starting rate tax band.

xylophone

Incidentally, the child's parent should make sure that  he has evidence ( a letter etc) from the donor of the gift as interest in excess of £100  arising on gifts to  an unmarried minor child from his parent (unless in a JISA) has tax implications for the parent.
https://www.which.co.uk/money/savings-and-isas/savings-accounts/childrens-savings-accounts/children-and-income-tax-ar1lz8u61109

JW_69

Thanks for these comments and advice 👍🏻 much appreciated.

JW_69

Alter_ego said:

No tax implications that I know of. Could be money laundering checks. If the donor dies the laws of their country of domcile will apply.

So it is likely that the tax implications re inheritance lie with the law of the donor's country..even when the recipient is a UK domiciled child?

JW_69

..ie the seven year rule re inheritance tax is a UK law relevant to gifts made in the UK?

xylophone

..ie the seven year rule re inheritance tax is a UK law relevant to gifts made in the UK?

It relates to gifts made by UK resident individuals to other people wherever resident.

https://www.tilney.co.uk/news/the-seven-year-rule-why-it-matters-when-making-financial-gifts

Malthusian

JW_69 said:

Alter_ego said:

No tax implications that I know of. Could be money laundering checks. If the donor dies the laws of their country of domcile will apply.

So it is likely that the tax implications re inheritance lie with the law of the donor's country..even when the recipient is a UK domiciled child?

There is no tax on receiving gifts in the UK. So yes.

JW_69

Thanks for all the advice.
Appreciated 👍🏻