Giving Parents Money Is Taxable?

MoneyInstigator

hi all,

Sorry if this is posted in the wrong place.

Let me be as simple as possible.

I transfer money to my parents (several hundred every month)

Doing some calculations I could end up paying them over £5k a period of one year.

Does this money get taxed and if so what is the best way to get around this.

Sorry if this is easy question, my knowledge on all these areas is pretty much crap!

CLAPTON

There is no gift tax in the UK so you can give any amount of money to anyone without paying tax.

However, if you die within seven years then gifts (withs some exceptions) made in the seven years before your death are added to your estate for inheritance tax purposes and if the result is over the IH threshold then IHT will be payable from the estate.

MoneyInstigator

Thanks Clapton.

Just one more question. You talk about inheritance tax, so am I right in thinking that if I pay my parent's bills on their behalf i.e change direct debits and credit card payments, the money would then not be taxed?

RayWolfe

The way you pay the money to your parents makes no difference to the tax implications.

MoneyInstigator

RayWolfe wrote: »

The way you pay the money to your parents makes no difference to the tax implications.

What about if say the household bills are under my name and I pay those bills. Does this still count as gifting money?

CLAPTON

are you married

is your estate worth more than 300k (or 600k if married)

do you own the house they are living in or what is the situation

are you spending this money out of your normal income or out of capital saved

RayWolfe

MoneyInstigator wrote: »

What about if say the household bills are under my name and I pay those bills. Does this still count as gifting money?

The way you pay the money to your parents makes no difference to the tax implications.
Sorry if that sounds the same as my previous post but I don't know how to make it clearer.
There may well be no tax involved, but hiding payments could look like tax evasion which is criminal.

MoneyInstigator

CLAPTON wrote: »

are you married

is your estate worth more than 300k (or 600k if married)

do you own the house they are living in or what is the situation

are you spending this money out of your normal income or out of capital saved

Not married

Have no property of my own. It is their own property.

Spending out of my monthly salary.

MoneyInstigator

RayWolfe wrote: »

The way you pay the money to your parents makes no difference to the tax implications.
Sorry if that sounds the same as my previous post but I don't know how to make it clearer.
There may well be no tax involved, but hiding payments could look like tax evasion which is criminal.

Thanks for that.

I'm really a newbie to all this but am really interested in finance etc so just learning as I go along.

CLAPTON

4 questions 3 answers

but well, if you are paying out of income then there is no inheritance issue as it's only concerned with funding from savings (capital) and not from income.

also is fairly unusual for children to die before their parents and so IHT is unlikely to be an issue anyway.

and if the unanswered question is that your estate is worth less than 300k there would be no inheritance tax anyway.

just give them the money.

jennifernil

That is really nice that you are looking after your parents, would that our children were so generous!

Keep up the good work!