Gifting money

Lisa12850

I am so confused  so hoping someone can clarify before my mum has a meltdown! If she wants to gift a large sum of money to her children over the yearly threshold will we need to pay any taxes. I think we have our head round IHT, estate value and 7 years but its around income tax etc which should we pay or can you be gifted money into your account with no tax other than god forbid IHT on death within the 7 years estates amounts permitting? 


Thanks all

Jeremy535897

On gifts of cash there is no income tax or capital gains tax charge, although as you are aware gifts made within seven years of death can be subject to inheritance tax if they exceed the nil rate band.

Lisa12850

Thank you so much.

Willsie01

Just to expand the topic a little: If my wife and I gift my daughter £50,000 to help with a house purchase there won't be any tax liability unless we both die within 7 years?

Keep_pedalling

Willsie01 said:

Just to expand the topic a little: If my wife and I gift my daughter £50,000 to help with a house purchase there won't be any tax liability unless we both die within 7 years?

There won’t be any tax liability even if you both die within 7 years. Your estate may have to pay IHT on the gift but the liability won’t be any higher than it would have been if you hadn’t made the gift. Assuming you have not used any of your annual exemptions and that this is a joint gift then only £44,000 will be subject to the 7 year rule, and if you did not use the previous year’s exemptions then that can be carried forward will reduce that to £38000.

Albermarle

Basically you can give money to whoever you like without any tax implications, apart from the IHT one. However as clearly stated in the previous post but seemingly widely misunderstood
' Your estate may have to pay IHT on the gift but the liability won’t be any higher than it would have been if you hadn’t made the gift.'

One thing you should do though is make a record of any gifts, which will help whoever is dealing with your estate after you die.

Jeremy535897

If the cumulative gifts made by a donor in the seven years prior to death are within the nil rate band, the estate will not pay tax on them, but there may be more tax on the estate if it is not covered by the residue of the nil rate band or exemptions.

Weirdnana

As I get older would I be better selling my property then gifting part of proceeds for my family to buy a property and for me to go into over 50's rental property for health reasons

Jeremy535897

That depends on the value of your home and how long you live after making the gift. If you don't survive for seven years, depending on the value of the gift, you may save no inheritance tax at all. Depending on all the facts, you may lose some residential nil rate band. See:
https://www.gov.uk/guidance/how-downsizing-selling-or-gifting-a-home-affects-the-additional-inheritance-tax-threshold

joesoap1264

Jeremy535897 said:

If the cumulative gifts made by a donor in the seven years prior to death are within the nil rate band, the estate will not pay tax on them, but there may be more tax on the estate if it is not covered by the residue of the nil rate band or exemptions.

Hi J, could you expand on that, cannot quite understand it.
cheers

Keep_pedalling

Weirdnana said:

As I get older would I be better selling my property then gifting part of proceeds for my family to buy a property and for me to go into over 50's rental property for health reasons

Moving into sheltered housing or assisted living might be a good option, but if your house is your only major asset it would foolish to give away the proceeds that might later in life save you ending up in over my dead body grange care home.