Can I give my wife £20,000 tax-free to put into a Cash ISA?

[Deleted User]

Face said:

I had just seen on the GovUK website that it was limited to £3K tax free gift allowance?

Although he is doing OK for himself and doesn't need me to help at the moment

You can give whatever you wish tax free. The £3000 gift allowance relates to inheritance tax. If you live for seven years it’s irrelevant. If your estate is not liable to inheritance tax, it’s irrelevant.

Face

Dazed_and_C0nfused said:

Face said:

I had just seen on the GovUK website that it was limited to £3K tax free gift allowance?

Although he is doing OK for himself and doesn't need me to help at the moment

I think you're getting confused by what you can give away, whatever you want, and what you can give without there being a potential IHT implication.

More than likely 

So does that mean that I could give my son, for example, £100K and so long as I don't die in the next 7 years it would be tax-free for him?

Jeremy535897

I dismissed IHT as a concern because transfers between spouses are exempt from inheritance tax, and whatever imbalance between the spouses' estates is created by the gift is most likely going to be irrelevant given the transferability of nil rate bands between spouses.

Leaving assets to children has never been exempt from inheritance tax, or its predecessors. For income tax purposes, if a parent gives their minor child assets, any income (subject to a de minimis of £100) is assessed on the donor parent. Before the separate assessment of spouses, income on any gift from the husband and wife continued to be assessed on the husband, but that was a long time ago. The issue of "genetic relation" is irrelevant. A husband and wife will each contribute to the marital assets, and it would be impractical to charge tax on gifts between them, so they could always arrange assets between themselves to minimise any inheritance tax charge.

[Deleted User]

Face said:

Dazed_and_C0nfused said:

Face said:

I had just seen on the GovUK website that it was limited to £3K tax free gift allowance?

Although he is doing OK for himself and doesn't need me to help at the moment

I think you're getting confused by what you can give away, whatever you want, and what you can give without there being a potential IHT implication.

More than likely 

So does that mean that I could give my son, for example, £100K and so long as I don't die in the next 7 years it would be tax-free for him?

It’s always tax free for him. It’s the estate that would be liable if you didn’t live for seven years. If you do, there are NO tax implications.

Jeremy535897

Say you give your son £100,000 today, and you make, and have made, no other gifts. 2 annual exemptions would reduce the gift (a potentially exempt transfer) to £94,000. If you die at any time in the seven years following the gift, £94,000 of your nil rate band covers the gift, and your spouse takes the balance (up to £406,000) of your nil rate bands. When she dies, she has nil rate bands, including the transfer from you, of up to £906,000. If her estate was worth £1 million, £94,000 would be subject to inheritance tax on her death rather than nil.

calcotti

Dazed_and_C0nfused said:

Face said:

Hi,

I have just over £80K that I want to put in to Cash ISAs.

My "plan" was to open 2 Cash ISAs (one in my name and one in my wife's name) in either Feb or March 2023 this year and then open another 2 Cash ISAs (again, one in my name and one in my wife's name) in May 2023.

What I would like to know is can I give my wife the £20K each time to put in to her Cash ISAs without any tax implications?

Any advice would be greatly appreciated.

Thank you very much.

There is a slim chance chance there could be IHT implications if you did in the next 7 years.

I thought any transfers between spouses are exempt from IHT so what are the possible IHT implications related to gifting money to the wife I didn’t think such gifts come under PET rules.

Jeremy535897

calcotti said:

Dazed_and_C0nfused said:

Face said:

Hi,

I have just over £80K that I want to put in to Cash ISAs.

My "plan" was to open 2 Cash ISAs (one in my name and one in my wife's name) in either Feb or March 2023 this year and then open another 2 Cash ISAs (again, one in my name and one in my wife's name) in May 2023.

What I would like to know is can I give my wife the £20K each time to put in to her Cash ISAs without any tax implications?

Any advice would be greatly appreciated.

Thank you very much.

There is a slim chance chance there could be IHT implications if you did in the next 7 years.

I thought any transfers between spouses are exempt from IHT so what are the possible IHT implications related to gifting money to the wife I didn’t think such gifts come under PET rules.

That's why I dismissed the point above:

I dismissed IHT as a concern because transfers between spouses are exempt from inheritance tax, and whatever imbalance between the spouses' estates is created by the gift is most likely going to be irrelevant given the transferability of nil rate bands between spouses.

Gifts to the son will be potentially exempt transfers, to the extent not covered by an exemption (the annual exemption for example).

calcotti

I realise you had dismissed it, Jeremy. I was curious what Dazed_and_Confused was concerned about.

Jeremy535897

I guess I could think of something if I tried hard enough! A spouse ceasing to be UK domiciled, perhaps, or divorce possibly, although even in these cases it is unlikely.

Albermarle

It is strange how many of the public seem to be aware of a relatively obscure rule about IHT and gifting £3K, and how the large majority of them totally misunderstand it. We regularly have posters like the OP ( and I know people personally) who think there is some kind of tax when giving gifts.
A friend of ours was convinced that by giving gifts you end up paying more IHT that you would have otherwise, which of course is not the case at all.