Recurrent monies from parents towards granddaughter savings - tax implications

Masha_2

Hi, I have a question, my family has a business abroad. my parent started transferring monies every month into my account in UK for my daughter of about £800 and just want to know if I have to declare this for tax implications, at the moment this is planned to be for a about a year. I imagine this is considered to be my own income as it comes to my account. but do I still have to declare this or pay tax from it? I'm transferring the monies on a child account for her own savings. I'm self employed part time and have low income so currently don't pay taxes.  
Thanks a lot. 

xylophone

A gift of cash is not income and therefore is not subject to income tax.


Presumably your parent has checked on any tax implications in his country of residence.

Do you have a letter from your parent explaining that the cash is for your child?

Are you receiving means tested benefits?

Is there any reason why the gift should not be made by direct transfer from your father's account to your daughter's?

cloud_dog

I appreciate interest rates are particularly low at the moment, and this may not be a significant consideration but, you need to be aware of the HMRC £100 interest rule regarding parent/guardian contributions.  Again, I appreciate that the money was sourced from grandparents but it has been given by you/paid from your account and you therefore need to ensure you retain appropriate records in case you ever need to justify the source of the money.

whitesmith

In the UK there is no tax to pay by you on any monies received as a gift. Your are also free to subsequently do what you want with the money eg give it to your daughter.

I am assuming the money is coming from your parent's personal account ie NOT from the business account. If it is from the business account you might be on shaky ground proving it is a gift as opposed to eg salary or other renumeration.

As other's have mentioned, make sure you are not receiving any means tested benefits. 

there may be IHT implications but these will be for your parent to sort out in their country of residence - also any other tax implications there of course (eg gifts may be taxable there)

Masha_2

xylophone said:

A gift of cash is not income and therefore is not subject to income tax.


Presumably your parent has checked on any tax implications in his country of residence.

Do you have a letter from your parent explaining that the cash is for your child?

Are you receiving means tested benefits?

Is there any reason why the gift should not be made by direct transfer from your father's account to your daughter's?

thanks for that. there is no letter, it would be good they can send an email stating this is towards my daughter's. 
I was checking on the means testing benefit, as currently I looking to move from the the matrimonial home. I'm divorcing and cohabiting so really hard until the judge decides on the split. if I were to find a rental property. it appears I would be eligible for help on housing. but it is seems to be hard as single mum, the income requirements are really high and apparently landlords do not accept people receiving help on payments towards rent. 
Yes it's probably better if the money goes into my daughter's accout, but I'm responsible for that account too, they say, her account counts as part of my capital anyway unless is isa junior account.

Masha_2

whitesmith said:

In the UK there is no tax to pay by you on any monies received as a gift. Your are also free to subsequently do what you want with the money eg give it to your daughter.

I am assuming the money is coming from your parent's personal account ie NOT from the business account. If it is from the business account you might be on shaky ground proving it is a gift as opposed to eg salary or other renumeration.

As other's have mentioned, make sure you are not receiving any means tested benefits. 

there may be IHT implications but these will be for your parent to sort out in their country of residence - also any other tax implications there of course (eg gifts may be taxable there)

whitesmith said:

In the UK there is no tax to pay by you on any monies received as a gift. Your are also free to subsequently do what you want with the money eg give it to your daughter.

I am assuming the money is coming from your parent's personal account ie NOT from the business account. If it is from the business account you might be on shaky ground proving it is a gift as opposed to eg salary or other renumeration.

As other's have mentioned, make sure you are not receiving any means tested benefits. 

there may be IHT implications but these will be for your parent to sort out in their country of residence - also any other tax implications there of course (eg gifts may be taxable there)

Oh thanks for that confirmation of course that is for taxes only, it has to be reviewed altogether if I were to be eligible for housing costs on rental property which I'm looking to. I know for example child maintenance doesn't count either as income for taxes or for means tested benefits.

Apodemus

whitesmith said:

In the UK there is no tax to pay by you on any monies received as a gift. Your are also free to subsequently do what you want with the money...

...There is, however, a very small chance that this rattles someones cage on suspicions of international money-laundering!

xylophone

 they say, her account counts as part of my capital anyway unless is isa junior account.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/890315/admh1.pdf

Chapter H1: Capital Contents 

1. Ownership of capital of a child or young person

2. H1077  Capital owned either legally or beneficially by a dependent child or qualifying young person is not to be included in the capital of the claimant1. However, the DM may still need to make enquiries about such capital if it appears to be owned by the claimant but is actually beneficially owned by a child or young person for whom they are responsible.

That said, is there any reason why the gifts to the child should not be paid into her JISA?

Masha_2

xylophone said:

 they say, her account counts as part of my capital anyway unless is isa junior account.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/890315/admh1.pdf

Chapter H1: Capital Contents 

1. Ownership of capital of a child or young person

2. H1077  Capital owned either legally or beneficially by a dependent child or qualifying young person is not to be included in the capital of the claimant1. However, the DM may still need to make enquiries about such capital if it appears to be owned by the claimant but is actually beneficially owned by a child or young person for whom they are responsible.

That said, is there any reason why the gifts to the child should not be paid into her JISA?

Many thanks, that is very informative. Well my daughter doesn't have a JISA. Main reason is that we need flexibility. But surely the monies should instead go to her child account. Thanks a lot. 

xylophone

we need flexibility.

We? Any money owned by your child (which in effect you hold in trust for him/her) must only be used for his/her benefit.

Remember that a Decision Maker may well check that this is the case.

bowlhead99

xylophone said:

we need flexibility.

We? Any money owned by your child (which in effect you hold in trust for him/her) must only be used for his/her benefit.

Remember that a Decision Maker may well check that this is the case.

The standard answer to why 'we' (the parent-and-child combo) need 'flexibility' is that the child might want to spend her money on something before she gets to age 18, and would not enjoy the inflexibility of having to say 'you can't use that money from grandma to buy that barbie doll or book or dress or second-hand car that you like, until you're 18'. 

If there are a few hundreds or thousands of regular payments into the child's account, it's only fair for a decision maker to be allowed to ask about it, of course, but is usually easy to explain away unless you are actually trying to pull a fast one and hoard tonnes of family cash while taking benefits.