Can a business gift money for a personal Mortgage?

Tr33house

My parents are willing to gift me £200k for a property as a deposit towards a mortgage.

However, it occurs to me that most of that money sits in their business account. Are they able to gift money from a business account? 

We are going to talk to our accountant next week but wanted to see if anyone had any idea about this?

prowla

I'd be looking up tax evasion...

Grumpy_chap

Your parents need to draw the funds from the business - either salary or dividends - and pay the respective taxes due.

Unless they have lent money to the business that can now be drawn from the director's loan account.  That still needs to be documented in the business accounts.

Once the money is drawn from the business, your parents can do as they wish with the funds, including gifting to you.

Adamhoward20

Oh god, definitely speak to your accountant. Easily possible but you need to make sure you do it in the correct way with the correct paperwork and tax obligations.

simon_or

Tr33house said:

My parents are willing to gift me £200k for a property as a deposit towards a mortgage.

However, it occurs to me that most of that money sits in their business account. Are they able to gift money from a business account? 

We are going to talk to our accountant next week but wanted to see if anyone had any idea about this?

Money sitting in the company's business account is (at that point) the company's money and not the individual owners' money. The company cannot decide to gift it to a third party.

Once the funds are extracted from the company to your parents' personal bank accounts - by way of dividends, salary, director's loan, etc - all of which might have varied tax implications, then your parents can gift it to you.

For a large amount, the solicitor will ask for 3-6 months or more of bank statements for source of deposit AML checks to verify the movement of funds before it hits your bank account.

I'd be interested in knowing what your accountant suggests as a way to do this.

ACG

No. A business can not gift someone money. 

They need to withdraw the money, pay the tax on it and then can gift it to you. 
Another potential option could be for the business to loan them the money and they pay it back over time. But my accountant has told me my business needs to charge market rate interest when giving out a loan. 

The business is its own entity, if the business was owned by someone else, would it give you the money? Your parents have a legal responsibility towards the company to act in its best interests - although realistically, I think when you look at the likes of the water companies and nobody there getting locked up your parents are probably fairly safe in that regard. 

Definitely one for the accountant. 

amnblog

Be careful with this from a lender point of view. I had difficulties with a similar situation last year where the Lender would not accept (gift) funds that originated from business account.