Large gift from parents abroad

dutchcloggie

Hello,

My parents, who live in the EU, want to give me 15,000 euros (about £12,900) for a deposit for a house. Can they just transfer this money or are there rules I need to watch out for?

eskbanker

Not really rules as such, but it's not unheard of for the receiving bank to see such transactions as suspicious, so make sure that there is some sort of documentary trail about the money and what it's intended for.

When purchasing the house, you'll need to ensure that the gifted deposit is included when declaring to the conveyancer and/or lender how you're funding the transaction.

Worth checking out the most cost-effective ways of transferring, which are likely to involve specialist currency brokers rather than incurring the poor rates when transferring directly bank to bank:

https://www.moneysavingexpert.com/banking/foreign-currency-exchange/

Bigwheels1111

I would class this as a non refundable gift.
It’s what my parents did when I purchased my house.
The gift was a tax liability as such for 7 years.
If After 7 years a parent is alive no tax would need to be paid.

eskbanker

Bigwheels1111 said:

I would class this as a non refundable gift.
It’s what my parents did when I purchased my house.
The gift was a tax liability as such for 7 years.
If After 7 years a parent is alive no tax would need to be paid.

That's how UK inheritance tax regulations treat such gifts, but as OP's parents live elsewhere (the Netherlands at a wild guess!), it's unlikely that the rules in their country will be identical other than by coincidence....

[Deleted User]

dutchcloggie said:

Hello,

My parents, who live in the EU, want to give me 15,000 euros (about £12,900) for a deposit for a house. Can they just transfer this money or are there rules I need to watch out for?

Open a UK based Euro account then they can do a straightforward SEPA payment.
HSBC, Barclays and Starling all offer Euro accounts without charge and you can convert when ready. 

kaMelo

Bigwheels1111 said:

I would class this as a non refundable gift.
It’s what my parents did when I purchased my house.
The gift was a tax liability as such for 7 years.
If After 7 years a parent is alive no tax would need to be paid.

You may class it like that, HMRC however would make their own decision. 
However it's all academic anyway, in the UK the recipient of a gift has no tax liability no matter how long the donor lives.

artyboy

kaMelo said:

Bigwheels1111 said:

I would class this as a non refundable gift.
It’s what my parents did when I purchased my house.
The gift was a tax liability as such for 7 years.
If After 7 years a parent is alive no tax would need to be paid.

You may class it like that, HMRC however would make their own decision. 
However it's all academic anyway, in the UK the recipient of a gift has no tax liability no matter how long the donor lives.

I know it's a bit OT, but how then does that work if the recipient is gifted the entire value of a person's estate just months before they die? That would suggest the estate would be insolvent due to the IHT liability, and HMRC would not be able to recover what was due...

Keep_pedalling

Bigwheels1111 said:

I would class this as a non refundable gift.
It’s what my parents did when I purchased my house.
The gift was a tax liability as such for 7 years.
If After 7 years a parent is alive no tax would need to be paid.

Wrong on multiple counts, The parents are not subject to UK IHT rules, but even if the parents were UK residence there would be no IHT liability with such a gift. Yes, non exempt gifts remain in the givers estate for probate 7 years but any tax due if they died within 7 years comes out of the residual estate not clawed back from the recipient (unless the gift was a very large one leaving the estate insolvent). 

Gifting never increases the amount of IHT liability but always reduces it even if you don’t survive 7 years due to your annual exemptions. Parents who have not gifted in the previous year can combine their £3000 annual exemptions to make a joint gift of £12,000 (£6000 each) which will fall out of their estates without the need to wait 7 years. 

MS644

Two points immediately come to my mind:
a) Under no circumstances should you let your UK bank exchange the EUR into GBP; their exchange rate will be abysmal. I'd suggest your parents send the money from their account in GBP -if you are happy with the fees and exchange rate- or alternatively use Wise (formerly Transferwise). With Wise, 15,000 EUR would arrive as 12,825 GBP at the moment.
b) In certain jurisdictions you have to tell the authorities if you move money across the border. It's usually just for statistical purposes. E.g. in Germany you must tell the Bundesbank if it is more than 12,500 EUR.