Gifting money to children

Expatmichali

Good day! We would like to gift our children some money from our savings. I understand a limit is £3000 per annum per child would be exempted from tax. However, as there are two of us ie mother and father, can we each give £3000 to our children? I could give £3000 to our son and my husband could give £3000 to our daughter? Any advice would be much appreciated. 

Mojisola

The 3k a year only relates to inheritance tax - and it's just 3k, not 3k to several different people.  Is your estate going to be liable for IHT?

Expatmichali

Yes it will be. I understand your answer but can we each give £3000? 

dunstonh

Good day! We would like to gift our children some money from our savings. I understand a limit is £3000 per annum per child would be exempted from tax.

You can gift as much as you like without any tax except if you die within 7 years of the gift and your estate is subject to IHT.  if its not going to be subject to IHT then there is no tax regardless of the amount you gift.    

Plus, in addition to the £3000 gift allowance for IHT, you can gift out of income with no liability.
Allowances are personal and not joint.

Your board name suggests you are an expat.   Is that an expat from the UK or to the UK?  (taxation in the UK may be irrelevant).

Keep_pedalling

The £3000 is an IHT exemption not a limit. If your joint assets are in IHT territory then gifting more is a good thing to do. If you live 7 years after making the gifts then the gift drops out of your estate, but if you die before then your estate will pay exactly the same tax on the non exempt gifts as it would if the gift had never been given. At best gifts reduce IHT at worse the result is neutral.

As for your annual exemptions, if you did not use them last year, you can carry that over and gift £6000 each. Any gifts you do make make sure you keep a record of them in case needed by your executor.

refluxer

Yes, it would appear you can do as you suggested and avoid possible inheritance tax implications in the 7 years following the gift, because the £3k limit applies on a per adult basis.

In addition to this, there is also a £100 limit on the amount of interest any money you give your child can earn in interest per year without It counting towards your own Personal Savings Allowance.

There is some useful information on both of these subjects here :

https://www.raisin.co.uk/taxes/gifting-money-to-children/

Albermarle

Plus, in addition to the £3000 gift allowance for IHT, you can gift out of income with no liability.

Does any kind of income count , salary, rental income , pension etc ?

Plus how do you prove it really is from income ? Or more importantly how would you prove to HMRC it really was from income ?

xylophone

Does any kind of income count , salary, rental income , pension etc ?

Plus how do you prove it really is from income ? Or more importantly how would you prove to HMRC it really was from income ?

https://www.tilney.co.uk/news/how-do-i-make-regular-financial-gifts-from-surplus-income#:~:text=When it comes to giving,your own standard of living.

xylophone

I understand your answer but can we each give £3000? 

https://www.gov.uk/inheritance-tax/gifts

You could make a gift to your daughter of £3000 and your husband could gift £3000 to your son.

If you and he did not use the allowance last tax year, you could gift £6000 to your daughter and he could gift £6000 to your son.

Keep_pedalling

Albermarle said:

Plus, in addition to the £3000 gift allowance for IHT, you can gift out of income with no liability.

Does any kind of income count , salary, rental income , pension etc ?

Plus how do you prove it really is from income ? Or more importantly how would you prove to HMRC it really was from income ?

The source is not important but it has has to be excess income, so detailed records need to be kept of income and expenditure otherwise your executor will struggle to claim it. 

badger09

Albermarle said:

Plus, in addition to the £3000 gift allowance for IHT, you can gift out of income with no liability.

Does any kind of income count , salary, rental income , pension etc ?

Plus how do you prove it really is from income ? Or more importantly how would you prove to HMRC it really was from income ?

The IHT403 is a good guide

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/917890/IHT403-05-20.pdf

My husband has been making regular gifts out of income to his adult son for many years. As one of his Executors, I've persuaded him to complete the schedule for recent years. Unlikely his Estate will attract IHT, but IF I do have to act as Executor (with said son) this will save a lot of work.