Gift allowances - a complicated one

abigailsrevenge

My mother-in-law left my son £5000 in her will. He transferred it to an account in my name so that he wouldn't touch it, to save towards a house deposit. Husband has now given him £6000 from his inheritance from his mother's estate (£3k from me, £3k from him to maximise the amount we can give him this year)

Of course, I now realise that the £5000 in the account in my name could also be seen as a gift.

Any idea how we can get around this? It has been in the account in my name for about 6 months

NottinghamKnight

What do yo think the problem is, the only obvious issue we would see in this arrangement from historic postings is the receiver running off with the money which presumably you have no intention of doing. How old is your son?

p00hsticks

Anyone can give as much as they want to in this country with no tax to pay by either the donor or recipient when making the gift. The £3k 'allowance' is simply what you can ignore when calculating any potential inheritance tax due from the donors estate if they happen to die within seven years.

As the £5k was left to your son in your MIL's will, then even though it;s in an account in your name it's not a gift from you to him so I think you can ignore that (although you do need to be aware that if you did die before giving him back the money it would have to be included in your estate).

As far as the £6k goes, you just need to make sure that the gift is documented. A simple dated letter saying 'dear son, here is £3k from me, your father, and £3k from your mother, as a gift to you' will be enough evidence for the executors of your estate to be able to ignore the gift if either of you should die  within seven years. 

abigailsrevenge

Sorry, I didn't say - son is 28.
We were worried that he will have to pay tax on the £5000. Are we overthinking it? I don't want to land him with a tax bill

NottinghamKnight

abigailsrevenge said:

Sorry, I didn't say - son is 28.
We were worried that he will have to pay tax on the £5000. Are we overthinking it? I don't want to land him with a tax bill

No tax on gifts in the uk. Has your son got a lisa, not an area I have much knowledge of but believe they may be advisable for house purchases for example.

abigailsrevenge

NottinghamKnight said:

abigailsrevenge said:

Sorry, I didn't say - son is 28.
We were worried that he will have to pay tax on the £5000. Are we overthinking it? I don't want to land him with a tax bill

No tax on gifts in the uk. Has your son got a lisa, not an area I have much knowledge of but believe they may be advisable for house purchases for example.

He is looking into getting a lisa - thankyou for the suggestion 

Sea_Shell

Is he likely to blow the cash on other things?   At 28, is he not able to manage or budget his own money?   Is he still living at home, or is he running a home (renting)?    

kazwookie

Get your son to open an account in his name that is fixed for (x) number of years.

Then he needs to get to grips with his money at 28, maybe some help from you or his dad

getmore4less

You are holding his money as a bare trust document that and it won't form part of you estate should you die. 

abigailsrevenge

Sea_Shell said:

Is he likely to blow the cash on other things?   At 28, is he not able to manage or budget his own money?   Is he still living at home, or is he running a home (renting)?    

Sea_Shell said:

Is he likely to blow the cash on other things?   At 28, is he not able to manage or budget his own money?   Is he still living at home, or is he running a home (renting)?    

He has been renting for many years. The account in my name dates back to when he was a teenager, giving me his 'rent' for living at home. It was just a convenient place to stash the £5k while he thought about what to do with it. 

I've made him sound a total numpty - he's really not