Giving gifts

Type_45

Apologies, but I've no idea which thread this should go in...
Would I be correct in this example:
"Simon, 40 years old and employed, but doesn't fill out a tax return, can legally receive up to £3,000 from any number of gift-givers every tax year without informing HMRC or having to do a tax return"?

eskbanker

To the best of my knowledge, recipients of gifts of any value aren't required to notify HMRC or complete a tax return.  The £3K limit you refer to is potentially a matter for the donors at the point of valuing an estate for inheritance tax purposes.

bowlhead99

Type_45 said:

Would I be correct in this example:
"Simon, 40 years old and employed, but doesn't fill out a tax return, can legally receive up to £3,000 from any number of gift-givers every tax year without informing HMRC or having to do a tax return"?

Factually, that's correct. Simon can certainly legally receive gifts up to £3000 from as many people as want to give him the money, and the receipt of those gifts will not cause him to need to inform HMRC or do a tax return.

However, the 'up to £3000' is a red herring, because you could replace it with any other number and it would still be correct. HMRC do not care that you have received money by way of gift.   Receiving a gift is not income or capital gain, so is not caught by either the income tax act or the taxation of chargeable gains act. It wouldn't be disclosed on a tax return. 

A caveat to 'HMRC do not care' about what Simon has received would be that sometimes they would be curious about the arrangement - for example, if the gift-giver is Simon's employer and he says he is paying Simon £30,000 in exchange for Simon working for him for a year and then is also going to give him a nice gift of £3000 on top which is nothing whatsoever to do with all the great work that Simon did, honest guv, then HMRC might raise an eyebrow.

Mickey666

eskbanker said:

To the best of my knowledge, recipients of gifts of any value aren't required to notify HMRC or complete a tax return.  The £3K limit you refer to is potentially a matter for the donors at the point of valuing an estate for inheritance tax purposes.

And potentially only for 7 years from the date of the gift, under the PET rules?

Incidentally, if these 'gifts' to Simon are from his parent(s), then presumably there are no tax implications whatsoever if he is under 18 and therefore a dependent child (perhaps 16?). 

But what's the situation is Simon goes to uni and his parents give him, say £10k per year to help with his living expenses.  Is that money a PET?   And after uni, when Simon lives at home rent-free with his parents for five year while saving for a deposit on a house, is there any sort of benefit-in-kind 'gift' assumed?  After all such an arrangement could easily be worth £10k per year.  

Indeed, what if Simon continues to live in the family home all his life until he inherits it (assume he's an only child) - obviously a huge benefit-in-kind but does it have any tax implications at all?

AnotherJoe

Type_45 said:

Apologies, but I've no idea which thread this should go in...
Would I be correct in this example:
"Simon, 40 years old and employed, but doesn't fill out a tax return, can legally receive up to £3,000 from any number of gift-givers every tax year without informing HMRC or having to do a tax return"?

Doesnt matter what his age or employment status is or how much.

However, it seems unlikely he would be getting genuine gifts if there are enough to ask the Q, so if you think youve come up with a cunning scheme to avoid tax by merely calling employment income a gift, think again..