How Much Money Can You Give As A Gift?

Paullus

Hello

I hope everyone is well.

I'm looking for some advice for my father, brother and self please.

My mother passed away last year leaving my father, who is in his nineties. Mum had £50,000 in Premium Bonds which remained active for the twelve months following her death. Dad has now cashed in the Premium Bonds and wants to give my brother and I some money, which of course is very nice. However, we are getting conflicting information on how much he can give us without anyone incurring a tax liabillity.

Dad is of the opinion he can give us as much as he wants as a gift.
After checking the HMRC site I believe he can give us each a one-off £6000 gift this year, which includes his tax free allowance of £3000 which he didn't use from 2020-21 tax year and the same for the 2021-22 period. After that he could give us a maximum of £3000 per year.

Both my brother and I are UK tax payers.

Can anyone give a definitive answer to this please?

Thank you.

Mojisola

There is no gift tax - unless your father's estate will be liable for inheritance tax, he can give what he likes without a tax liability.

If inheritance tax will be an issue, he can give one £3000 gift this year (and use last year's allowance), not several lots of £3000 to different people.

If inheritance tax will apply to his estate, the money he gives will be included in his estate if he doesn't survive for another seven years so the result will be the same whether you have the money now or after his death.

Depending on what other assets he has, he needs to be aware of the deprivation of assets rules.

Mojisola

Can't amend the above - meant to say - anything over the £3000 annual exemption would be included in his estate.

poppystar

Could a deed of variation not be used in this case as it is within two years of death? 

Keep_pedalling

poppystar said:

Could a deed of variation not be used in this case as it is within two years of death? 

A DoV would be pointless in this case. Even if the OPs father’s estate did fall inside IHT territory, gifts via a DOV would reduce the amount of transferable NRB from his wife’s estate. A straight forward gift would at least have the chance of drooping out of his estate under the 7 year rule.

Paullus

Thank you all for the replies.

A rough calculation of Dad's assets lead to a figure of around £275,000 to £300,000 depending on the value of his house, so below the current £325,000 IHT threshold.

So, from what I have read above, Dad is right and he can give my brother and I whatever amount he likes?

Thanks.

Keep_pedalling

Paullus said:

Thank you all for the replies.

A rough calculation of Dad's assets lead to a figure of around £275,000 to £300,000 depending on the value of his house, so below the current £325,000 IHT threshold.

So, from what I have read above, Dad is right and he can give my brother and I whatever amount he likes?

Thanks.

Yes, but he would be very foolish to give too much away. You should make sure he has left an amply emergency fund to pay for any major repairs that may crop such as a new boiler. 

Paullus

Keep_pedalling said:

Paullus said:

Thank you all for the replies.

A rough calculation of Dad's assets lead to a figure of around £275,000 to £300,000 depending on the value of his house, so below the current £325,000 IHT threshold.

So, from what I have read above, Dad is right and he can give my brother and I whatever amount he likes?

Thanks.

Yes, but he would be very foolish to give too much away. You should make sure he has left an amply emergency fund to pay for any major repairs that may crop such as a new boiler. 

Thank you. Dad is far from foolish though. He was a very successful businessman in his day who retired at 55 and lived life to the full. He still has the brain of a young man, unfortunately though stuck in an aging body

sevenhills

Paullus said:

Dad is of the opinion he can give us as much as he wants as a gift.

So long as he does not need care in the short term.

https://www.yorkshirepost.co.uk/health/ombudsman-finds-wakefield-council-were-entitled-not-to-pay-for-womans-care-as-she-recovered-from-covid-19-as-she-had-given-ps66000-away-to-her-family-3353166