Gift Allowance / Tax Payment

MR1988

Hello everyone!

I require some advice regarding a monetary gift.

My wife is to receive a gift from her father which is worth around £40k more or less, given the exchange rate and transfer fees.

Shortly, is there an allowance for gifts received from family members? And under what circumstances?

The gift will be coming from outside UK as my wife is from the Caribbean, and it will be through a bank transfer from her father's account to her bank account.

I read online (https://www.gov.uk/inheritance-tax/gifts) a bit about gifts and there is a 7 year rule but I'm not sure if this would apply to her or not since her father is not living in the UK. And how would they track if he would die or not in the next 7 years.

Any advice would be greatly appreciated on how to handle this situation best so we don't have to pay a large amount in tax. Thank you!

Jeremy535897

A gift of non-UK situated property by a non-UK domiciled donor is not subject to UK inheritance tax, no matter how much it is, nor how long before the donor's death it is made. There is no UK gift tax either. Whether there is any gift or inheritance tax in the country where your wife's father is domiciled is another matter.

Albermarle

Gifts in themselves are not an issue . The only issue is that if the giver of the gift , is potentially avoiding paying tax by giving their money away.
Just as an example, in the UK gifts can be a way of avoiding potential inheritance for the giver( if they actually have enough assets to worry about inheritance tax) , so rules are in place to stop this being abused, such as people giving away large amounts of money just before they die. If the giver .

In summary your wife can just accept the gift, and do what she wants with it with no tax implications for her at all.

MR1988

Thank you for your responses!

As far as I know he is not avoiding to have to pay tax. He recently retired and I believe he is up to date with all taxes as he himself was an accountant of profession and is still doing taxes privately for some companies or individuals from time to time. From what we know this is just savings he had accrued over the years and wants to help us pay a part of our mortgage as we just bought a house a couple of months ago and he wants to help.

Of course I don't know every personal detail of his life but we are pretty sure his intention here is to help us out.

I was just worried that we would have to pay tax ourselves upon receiving the money as I wouldn't want my wife to be in trouble because a huge amount of money entered her bank account and she did not declare it.