Large money gift from family member

bobblebob

As a gift last week a family member gave me a cheque for £4k. I remember reading something online abit ago about people being entitled to £3000 tax free gift allowance per year. Anything over that is taxable.

Is this different to Inheritance tax thats payable if said person dies within 7 years? Not sure if there is any tax implications paying a cheque in for this amount

Alter_ego

No implications whatever. If the person dies within 7 yrs £1000 could be included in their estate.

bobblebob

Thanks for the info. Was abit unsure when i read the £3000 limit thing

MDMD

You can give away £3000 of gifts each year, plus the prior year £3000 allowance if not used. Any inheritance tax is payable by the estate, not the recipient  - there is no gift tax in the UK

https://www.gov.uk/inheritance-tax/gifts

p00hsticks

MDMD said:

You can give away £3000 of gifts each year, plus the prior year £3000 allowance if not used. Any inheritance tax is payable by the estate, not the recipient  - there is no gift tax in the UK

https://www.gov.uk/inheritance-tax/gifts

Just to rephrase slightly - you can give away as much as you want whenever you want to. It's just that amounts over a certain amount may still be considered as part of your estate for inheritance tax purposes if you die within seven years.

jonesMUFCforever

bobblebob said:

As a gift last week a family member gave me a cheque for £4k. I remember reading something online abit ago about people being entitled to £3000 tax free gift allowance per year. Anything over that is taxable.

Is this different to Inheritance tax thats payable if said person dies within 7 years? Not sure if there is any tax implications paying a cheque in for this amount

For you as the receiver of the cheque there is no tax liability at all.

Notepad_Phil

p00hsticks said:

Just to rephrase slightly - you can give away as much as you want whenever you want to. It's just that amounts over a certain amount may still be considered as part of your estate for inheritance tax purposes if you die within seven years.

If someone did die within seven years, what would happen if the estate didn't have enough money/assets to pay the inheritance tax due?

eskbanker

Notepad_Phil said:

p00hsticks said:

Just to rephrase slightly - you can give away as much as you want whenever you want to. It's just that amounts over a certain amount may still be considered as part of your estate for inheritance tax purposes if you die within seven years.

If someone did die within seven years, what would happen if the estate didn't have enough money/assets to pay the inheritance tax due?

https://www.barkerevanslaw.co.uk/2019/02/inheritance-tax-cant-pay-wont-pay/

Notepad_Phil

eskbanker said:

Notepad_Phil said:

p00hsticks said:

Just to rephrase slightly - you can give away as much as you want whenever you want to. It's just that amounts over a certain amount may still be considered as part of your estate for inheritance tax purposes if you die within seven years.

If someone did die within seven years, what would happen if the estate didn't have enough money/assets to pay the inheritance tax due?

https://www.barkerevanslaw.co.uk/2019/02/inheritance-tax-cant-pay-wont-pay/

Thanks for the article but I was thinking of where the estate's assets didn't cover the IHT bill. I did a quick google and did find this on https://www.lawdonut.co.uk/personal/claiming-an-inheritance/claiming-an-inheritance-faqs . I guess it's extremely unlikely that anyone would ever get caught by this provision but makes sense that it is there.

I was given some money by a friend before they died - do I have to pay tax on it?

Inheritance tax can be payable on gifts made by someone during the seven years prior to death. Inheritance tax will only be payable if the total value of the estate (including any gifts made during the seven years prior to death) is more than the inheritance tax threshold (currently £325,000).

Even then, any inheritance tax due is normally paid by their executors out of the assets left in their estate. But if there is not enough to pay all the inheritance tax due, you could become liable.

eskbanker

It's not clear to me if those two pieces are actually differing - it seems reasonably evident that the executors are responsible to HMRC for settling IHT bills, whether or not the estate retained sufficient funds, but this could perhaps entail recovery of some contribution from gifts made to others, rather than a gift recipient (who could be outside UK tax jurisdiction) being directly responsible to HMRC for any IHT as such?

MACKEM99

bobblebob said:

As a gift last week a family member gave me a cheque for £4k. I remember reading something online abit ago about people being entitled to £3000 tax free gift allowance per year. Anything over that is taxable.

Is this different to Inheritance tax thats payable if said person dies within 7 years? Not sure if there is any tax implications paying a cheque in for this amount

Wow what a present.