Parents pay off credit card

Nothadoth

Hi

My parents have offered to take over my monthly credit card payments. I have tried searching on google but have been unable to find out whether or not I would be liable to any tax on the money paid on my behalf. Or is there anything else I should be aware of?

Thanks in advance.

400ixl

Each parent can gift you £3000 individually (I believe that is the right figure) per year and it will not be counted towards Inheritance tax.

The credit card company will only be interested in where it came from from a money laundering point of view. Do your parents plan to pay it directly, or gift you the money to pay your bill?

Nothadoth

They plan to pay it directly. 

phillw

Nothadoth said:

They plan to pay it directly. 

Are they going to pay via debit card/bank transfer/direct debit?

Have you checked with the card issuer if they will accept payments from someone else?

Nothadoth

So it is right that the money they pay to the credit card counts as a gift and goes toward the annual cash gift allowance?

If it is per person, then each parent could give £3000, totally £6000? (I read that earlier too, but can't find a reference to it). Does it matter if they are paying from a joint account, and are still married?

From what I understand looking at the gov.uk website (https://www.gov.uk/inheritance-tax/gifts), they are able to carry over their allowance from the previous tax year - so given they have not provided any cash gifts in the year 2021/22, that figure would double again to £6000 per parent?

Nothadoth

phillw said:

Nothadoth said:

They plan to pay it directly. 

Are they going to pay via debit card/bank transfer/direct debit?

Have you checked with the card issuer if they will accept payments from someone else?

They were going to pay by debit card directly to the credit card. I haven't, that was going to be my next step

penners324

Should be fine fine. I've done this and was never a problem, and quire a bit more than £3k

They can also set up a standing order using the credit card account details with the credit card number as the reference 

Nothadoth

Is that a “it’s fine if they don’t know about it” type of fine? 

I’m surprised that google searching this doesn’t give a definitive answer.

Ringing the card supplier had me on hold for over an hour, will try again tomorrow. 

Nothadoth

Or does it fall under PET (potentially exempt transfer)?

GrumpyDil

Don't overcomplicate it. If less than 3000 per year then it's covered by the 3000 per year gift limit. There's also an exemption for regular payments out of income as long as they don't impact the doner's standard of living. 

PET only becomes if Interest if the amount is not covered by either of the other two methods. 

Nothadoth

Thanks everyone