Monetary Gift

matthewp8181

Hi There 

Hoping someone might be able to help out.
My Father hasn't been well recently and wanted to give my brother, sister and myself quite a large sum of money to do what we please with. He is worried about us having to pay tax? Which is the best way for us to move the money. Plus where is best to keep it, at the minute we have most of our savings in bonds, while its not the best at the minute with the current changes, the interest rates from banks are not much better.
Any help would be gratefully received.
Kind regards
Matthew

Albermarle

Your Father can give away as much of his money as he likes to anybody he pleases and there is no tax to pay .
The issue he is maybe thinking about is that when he dies, if  the estate that he leaves is large enough to be liable for inheritance tax . In that case any gifts that he made in the previous seven years will be counted in the IHT calculation ( it is to stop people deliberately giving away money to avoid IHT) It is a sliding scale in that gifts made longer ago do not count as much.
If his estate is unlikely to have to pay IHT , then the gifting becomes a non issue.

Which is the best way for us to move the money. Plus where is best to keep it, at the minute we have most of our savings in bonds,
Any normal transfer method is fine. FYI 'Bonds' can mean many different things so can not comment on that .

Sea_Shell

Would his estate be liable for Inheritance tax if he kept this money?

justworriedabit

Albermarle said:

Your Father can give away as much of his money as he likes to anybody he pleases and there is no tax to pay .
The issue he is maybe thinking about is that when he dies, if  the estate that he leaves is large enough to be liable for inheritance tax . In that case any gifts that he made in the previous seven years will be counted in the IHT calculation ( it is to stop people deliberately giving away money to avoid IHT) It is a sliding scale in that gifts made longer ago do not count as much.
If his estate is unlikely to have to pay IHT , then the gifting becomes a non issue.

Which is the best way for us to move the money. Plus where is best to keep it, at the minute we have most of our savings in bonds,
Any normal transfer method is fine. FYI 'Bonds' can mean many different things so can not comment on that .

A very helpful post.
If we were to gift money, ie more than the 250 pounds, lets say a few thousand each to our children, how should we record that?
Having read a lot about it recently my husband thinks that the record of a bank to bank transfer will stand. IE, we make a gift of
x amount to child number 1, 2, 3 and when the money is transferred the details we write in our account are as follows.
'Gift to  xxx  xxxxxxxx.'
Would that be sufficient should it ever come to IHT reasons?
(A couple of years ago we had the roof done when we were away on holidays and our son paid the 7 thousand pound. When we got back home we transferred the money stating 'Returning roof money.'  (The receipt for the roof replacement is in our name.)

HappyHarry

justworriedabit said:

Albermarle said:

Your Father can give away as much of his money as he likes to anybody he pleases and there is no tax to pay .
The issue he is maybe thinking about is that when he dies, if  the estate that he leaves is large enough to be liable for inheritance tax . In that case any gifts that he made in the previous seven years will be counted in the IHT calculation ( it is to stop people deliberately giving away money to avoid IHT) It is a sliding scale in that gifts made longer ago do not count as much.
If his estate is unlikely to have to pay IHT , then the gifting becomes a non issue.

Which is the best way for us to move the money. Plus where is best to keep it, at the minute we have most of our savings in bonds,
Any normal transfer method is fine. FYI 'Bonds' can mean many different things so can not comment on that .

A very helpful post.
If we were to gift money, ie more than the 250 pounds, lets say a few thousand each to our children, how should we record that?
Having read a lot about it recently my husband thinks that the record of a bank to bank transfer will stand. IE, we make a gift of
x amount to child number 1, 2, 3 and when the money is transferred the details we write in our account are as follows.
'Gift to  xxx  xxxxxxxx.'
Would that be sufficient should it ever come to IHT reasons?
(A couple of years ago we had the roof done when we were away on holidays and our son paid the 7 thousand pound. When we got back home we transferred the money stating 'Returning roof money.'  (The receipt for the roof replacement is in our name.)

It would be best to record it in a way that your executors know about. After all, they will be the ones completing the IHT forms after your death. This isn't meant to sound flippant, but the point of recording such gifs is to make life easier for your executors, and stop them needing to scour bank statements for details. The format of such records is immaterial, as long as your executors can find it and understand it.

matthewp8181

Thank you all very much indeed for your help. In regards to where to keep the money I meant to say Premium Bonds. Is that the best place to leave the money?

Albermarle

matthewp8181 said:

Thank you all very much indeed for your help. In regards to where to keep the money I meant to say Premium Bonds. Is that the best place to leave the money?

That is a completely different question from the 'gifts ' question .
How best to deploy any savings or inheritance or gift is impossible to say without knowing the full details of your circumstances.
Age ?Family? employed? pension arrangements?  other savings or investments? etc  

matthewp8181

Oh ok, I'm 39 my partner is 41 we have two boys, all our savings are in premium bonds.

Albermarle

matthewp8181 said:

Oh ok, I'm 39 my partner is 41 we have two boys, all our savings are in premium bonds.

The problem with savings /premium bonds is that most of the time the return is below inflation, so every year your money loses value and over a longer period this will be significant . Once you have enough savings to cover emergencies ( can mean 6 months expenditure in case you lose your job for example) then you should also look at long term investments . These involve some risk of loss , in return for potential of higher growth . 
As long as you stick to mainstream investments and keep invested long term , the chances of a loss are small  compared to the chance of a gain . Although some volatility along the way can be expected ( hence the emphasis on long term )
Normally investing via a pension ( can be just adding more to an existing workplace pension ) is the most tax beneficial but also Stocks and shares ISA's can be used .
Pensions & Investing - MoneySavingExpert
Investing for beginners: Why do we invest? - Monevator