Gift Tax

TopCat21

My daughter wants to cash buy a flat for £60000 for me to live in. Is it best to gift me the money and I buy it, writing a will to pass onto her on my death or she buys it as a 1st time buyer and I live in it?? Cost tax implications?

TadleyBaggie

There is no such thing as gift tax, she can gift as much as she like to you. What happens to your estate on your death is completely unrelated.

AdrianC

If she buys it, and you occupy it, then she will be your landlord.

If she does not already own her own home, then squandering her FTB incentives on your property would be foolish - and she would pay +3% SDLT on any home she does eventually buy.

What would make most sense is for her to loan you the money, then put a charge against the property so that that loaned sum is seen as a debt and not part of your assets.

[Deleted User]

TopCat21 said:

My daughter wants to cash buy a flat for £60000 for me to live in. Is it best to gift me the money and I buy it, writing a will to pass onto her on my death or she buys it as a 1st time buyer and I live in it?? Cost tax implications?

There is not gift tax in the UK and there are no benefits to your daughter buying the property as a FTB if she won't be living it.  All she will do is spunk her chance at the SDLT relief for FTB for when she does buy a home of her own.

From a tax perspective it would be better for your daughter to lend you the money and secure the loan with a charge registered against the property the same a a mortgage lender would do.  A will is also a good idea.

theartfullodger

Not to be gloomy but if she dies within 7 years and you still living, if she has a significant estate value there may be IHT (Inheritance tax) to pay on the gift.

Don't forget (are you a charity) "Gift Aid" gives another 25% to charity thanks to Gordon Brown, and if giver is a high-rate tax-payer, reduces their income tax (? Gift Tax??).

davidmcn

theartfullodger said:

Not to be gloomy but if she dies within 7 years and you still living, if she has a significant estate value there may be IHT (Inheritance tax) to pay on the gift.

Though if she doesn't make the gift, it will definitely form part of her estate...

getmore4less

theartfullodger said:

Not to be gloomy but if she dies within 7 years and you still living, if she has a significant estate value there may be IHT (Inheritance tax) to pay on the gift.

Don't forget (are you a charity) "Gift Aid" gives another 25% to charity thanks to Gordon Brown, and if giver is a high-rate tax-payer, reduces their income tax (? Gift Tax??).

very unlikely as the estate will be paying not the beneficiary of the gift.

justworriedabit

 Someone close to me is getting a cash gift soon as is his sibling from an uncle. The uncle has taken out life insurance to cover any taxes should he pass away before the 7 years. The amounts are well over the IHT thresholds. Therefore that is covered.

If we were to cash gift/etc to someone over the IHT limits then they died soon after but the estate they were left with could not cover the IHT dues, will HMRC go after those gifted? Have there been any cases of that where a gift given as aforementioned and the person gifting dies a year or 6 after,

Another question - someone gives away large amount beyond IHT thresholds - then the gifter ends up in care spend 2 yrs there before they die. The council will want their money back if not already covered - who get the first bite the council or HMRC.

Anyone gifting large amounts should consider insurance to avoid the risk of those gifted being burdened with tax imo if the hmrc is to chase those gifted and this is why the someone i referred to in my first paragraph has taken out an insurance. I think you can also take out an insurance in trust if you want to leave money to loved ones and fear care home fees may eat up your wealth.

LL_USS

@justworriedabit do you know how this uncle you talked about above " taken out life insurance to cover any taxes should he pass away before the 7 years. The amounts are well over the IHT thresholds". Do you think he just set up the life insurance and put the limit that covers the estimated tax that would incur, or a part of that life insurance is to pay for all outstanding tax (with an estimation of how much tax it would be including IHT)? I find this quite difficult to comprehend as the IHT would be the liability of the person who inherits from him, not him. Thanks.

Bookworm225

LL_USS said:

@justworriedabit do you know how this uncle you talked about above " taken out life insurance to cover any taxes should he pass away before the 7 years. The amounts are well over the IHT thresholds". Do you think he just set up the life insurance and put the limit that covers the estimated tax that would incur, or a part of that life insurance is to pay for all outstanding tax (with an estimation of how much tax it would be including IHT)? I find this quite difficult to comprehend as the IHT would be the liability of the person who inherits from him, not him. Thanks.

@ll_uss the person you mention has been banned from this site so will be unable to reply to you 

you have asked about insurance in another thread as well, rather than search for threads that are 4 years old have you tried to research it yourself? Plenty of companies have websites that explain their offerings, here is a random example:

Life Insurance and Inheritance Tax Explained | Vitality

user1977

LL_USS said:

@justworriedabit do you know how this uncle you talked about above " taken out life insurance to cover any taxes should he pass away before the 7 years. The amounts are well over the IHT thresholds". Do you think he just set up the life insurance and put the limit that covers the estimated tax that would incur, or a part of that life insurance is to pay for all outstanding tax (with an estimation of how much tax it would be including IHT)? I find this quite difficult to comprehend as the IHT would be the liability of the person who inherits from him, not him. Thanks.

You're replying to a thread from 4 years ago, and that poster isn't going to reply:


If you have a query you'd be better to start your own thread (and probably on the Insurance board rather than here). But in answer to the last bit, bear in mind that IHT is the liability of the estate, not the beneficiaries.