Father providing funds for my first home

acakayak

Hello,

I saved some money and I would like to buy my first home. However, I found a home that is out of my budget at the moment (I need two more years of savings for it) and my father offered to give me money for it.

This would be the first time ever that my father will make "official" bank transfer to my account. So far, he was giving me money when I was a child and since I turned 18 I never received any money from him.

My question therefore is - are there any tax implications here and do I have to declare these funds anywhere?

I am aware that there is inheritance tax, but my father is alive and hopefully will stay healthy and alive for at least 30 more years (he is 55 now). 

Thanks!

user1977

No (UK) tax implications about receiving a gift, other than the potential Inheritance Tax which you seem to be aware of.

acakayak

Thanks for prompt response.

So if my father is alive and well, he can send to me any amount of funds and that would be outside of scope of inheritance tax?

acakayak

P.S. I tried googling and saw that there is tax free limit of 3,000gbp and that amounts above this are taxable in case of death within the 7 years (sooner the death, more tax to pay).

Does this mean that if parent sends 100,000gbp for example, there is no tax implication unless that parent dies within the next 7 years?

WickedWitch123

If its towards your deposit then under anti money laundering legislation you will have to prove where the funds came from.  Your solicitor will require this.

user1977

acakayak said:

P.S. I tried googling and saw that there is tax free limit of 3,000gbp and that amounts above this are taxable in case of death within the 7 years (sooner the death, more tax to pay).

Does this mean that if parent sends 100,000gbp for example, there is no tax implication unless that parent dies within the next 7 years?

Yes, though bear in mind that if he doesn't gift you the money and still has it when he dies, it will be subject to Inheritance Tax anyway - so gifting it while he's alive isn't going to make things any worse.

This all assumes he is UK-domiciled, and that his estate would be large enough to be subject to Inheritance Tax.

acakayak

Thanks for responses.

@WickedWitch123 that is fine, I am not trying to hide anything. I understand your point though. His funds are clear, he sold a commercial property and paid tax on that.

@user1977 my father is not a UK citizen. Funds would be arriving from overseas. Since I am not UK citizen either (I am UK tax resident and I have ILR), he would probably send me funds in his home country towards my bank account in our home country, and then I would send them to my UK bank account (so funds would arrive to the UK as my funds, and transfer from my father to myself would happen outside of UK). Does this change things?

sammyjammy

Thats exactly the kind of transaction they would want to check thoroughly, you will have to evidence the transfers from source and will have to have written confirmation from your father that its a gift.

Money being filtered through many bank accounts is  how money laundering takes place (mostly)

user1977

acakayak said:

@user1977 my father is not a UK citizen. Funds would be arriving from overseas. Since I am not UK citizen either (I am UK tax resident and I have ILR), he would probably send me funds in his home country towards my bank account in our home country, and then I would send them to my UK bank account (so funds would arrive to the UK as my funds, and transfer from my father to myself would happen outside of UK). Does this change things?

Yes, completely. UK tax won't be relevant, he would need to check the tax position for his home country.

And as already mentioned, you'll need to be ready to provide the paper trail showing where the funds have come from, and ID for your father.

Keep_pedalling

Some countries have gift taxes, so you should check if that is the case for your father.

acakayak

Thanks, I have checked that already, and there should be no issues there. There is no tax in my home country.

Should I declare somewhere that I received funds once I send them to the UK or should I only do it when asked by solicitor when I buy property?

Also, do I need to show solicitor original documents or I need to translate them with Notary and have Apostile on them?