Tax Liability on Gifts from Parents

Hi All
A mother wants to gift her son 35k. Are there any tax implications, the Mother is 64 and in good health. I have read about being liable for tax on up to 325k if the benefactor should pass away within seven years but can't see categorically whether that applies here, and even if it does, is there anything else to be mindful of when gifting & accepting the money?

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  • mark55man
    mark55man Posts: 7,845
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    The 7 years thing is if the mother dies within 7 years the gift can be regarded as part of the estate, and potentially exempt from Inheritance Tax.

    There was a thread somewhere that said a letter should be written with both parties having a copy being clear it is a gift without reservation (ie the mother has no retained benefit from the gift) , and this will make it easier

    The other thing to watch out for (and plenty of threads) is that if the mother needs a care home, then the gift can be seen as deprivation of assets by the local council (without time limit), although her being in good health at the time of the gift is some mitigation.  This is to prevent family assets being shovelled under the carpet the moment care is seen to be needed

    On the other hand though, I do believe that notwithstanding the above trickle down should start early.  The best way to avoid   inheritance tax is to have given it away!.  Other than the above, no tax is normally due on the giving or receipt of the gift.  There are also exemptions (set amounts that I can't recall) for gifts on marriage and regular gifts to children (3K rings a bell), plus also if the mother has excess income, then a regular gift out of excess income could also be made, but this has to be regular.

    All the above have legal complexity so be careful out there, but sometimes knowing the range of options is important
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