My father gifted me 3000ukp but I tx'd it back to him.

MikMikandThriceMik

Is this Still classed as him gifting me the money so he can't gift me a lump sum again this year?

tacpot12

No, because you returned it, it is part of his estate again, he can regift you £3000. 

Keep_pedalling

There is no limit on how much people can gift, the £3000 is just an IHT exemption not a limit.

Malthusian

tacpot12 said:

No, because you returned it, it is part of his estate again, he can regift you £3000. 

Is there a source for that?
I can't see an explicit statement in the tax manual or the legislation that says that if two individuals both gift money to each other, it's only the net amount that is considered a transfer of value.

Keep_pedalling

Malthusian said:

tacpot12 said:

No, because you returned it, it is part of his estate again, he can regift you £3000. 

Is there a source for that?
I can't see an explicit statement in the tax manual or the legislation that says that if two individuals both gift money to each other, it's only the net amount that is considered a transfer of value.

I agree what we have here is  three gifts with the same money, although it could be easily claimed that the first gift was a loan, the second was the repayment and the third an actual gift.

tacpot12

Malthusian said:

tacpot12 said:

No, because you returned it, it is part of his estate again, he can regift you £3000. 

Is there a source for that?
I can't see an explicit statement in the tax manual or the legislation that says that if two individuals both gift money to each other, it's only the net amount that is considered a transfer of value.

I did have a source for this, but I've looked in my history and can't see which one it was. I researched the question before replying. If I recall the arguement correctly, it went along these lines:

If I give one gift of £3000 in a year (which is my allowance), my executors can claim that my estate is lower by the amont of this gift. But the person I gave it to returns the gift as unwanted, my executors can't claim my estate is lower because it isn't - the gift wasn't made and the value of my estate (for IHT) has been returned to its original value. IHT is due on the full value of the estate. (This is the most beneficial situation for HMRC).  

This isn't a rule about offsetting or netting gifts, it's a fundamental question of whether the gift was made or not, if it was returned. I think HMRC would have a view on a situation where the the gift were not returned promptly. If it landed in a bank account paying interest it would create a complication, but fundamentally I think it can be argued that a gift that is not accepted has not been gifted at all. It remains the property of the giver UNTIL it is accepted, and this acceptance could be signalled by allowing it to rest too long in any place, but especially somewhere where the receiver will derive any sort of benefit from it. 

I would agree that there is no rule that would allow gifts to be netted off, i.e. if I give you £3000 and you give me £3000 'in return' then both our estates avoid £3000 being included for IHT; clearly that is not right. But both estates being left in the same position as they had been when the unwanted transaction occured seems fine. 

Malthusian

Yes, I agree with you that if the gift was returned immediately, the executor could reasonably say that it had never been made in the first place and shouldn't be considered a transfer of value. I was intrigued as to whether there was any possibility the gift could be "double-counted", i.e. both the money still in your account and the failed PET (assuming the £3,000 annual allowance is used up elsewhere).

I would agree that there is no rule that would allow gifts to be netted off, i.e. if I give you £3000 and you give me £3000 'in return' then both our estates avoid £3000 being included for IHT; clearly that is not right. 

Neither estate could avoid anything by doing that - the best case scenario is that both £3,000 gifts are exempt for one reason or another, but they still have £3,000 sitting in their hands.