Gifting money regularly to my partner

Ryan_Holden

Hi All

I have done plenty of searching inside this forum and on the internet, and I believe I've got it right. I'd just like to get opinions from people to make sure they agree with me. (I also couldn't figure out which was the best forum to post in so apologies if I've got the wrong one!)

Problem Statement

• I would like to send my girlfriend a monthly payment of around £200 every month to assist her with the cost of living.
• We do not live together, she has a son and she works part time due to his schooling. She has a low income and receives in-work Universal Credit.
• I am fortunate enough to have a job that affords me the ability to help her however I want to make sure it's above board.
• I do not expect this money back (even if we break up) nor do I expect to receive anything in exchange for this money.
• I have considered other options like paying for her shopping and things but I want to mask the feeling of 'dependency' on me and allow her to feel as independent as she is.
  

My interpretation of Reading

• I can send her money monthly as long as she doesn't use it to make any further money (ie. she doesn't use it to earn savings interest or investments).
• It would be classified as a 'voluntary cash gift' meaning there is no quid pro quo / no expectation of anything in exchange.
• It will not affect her universal credit as she has less than £6000 in savings.
• It will not affect her universal credit as, because it is a gift, it is not considered 'unearned income'.
• It will be less than £3000 per year so should not affect any inheritance tax arrangements relating to my estate.
  
• There are no HMRC tax implications on cash gifts.

I would just like some opinions as to whether or not I've got this right, because if I have and I can then it would make a real difference to her life until we can live together.

Thanks in advance,

Bookworm105

correct
they are gifts that do not impact UC as long as she does not let it build up to above the capital threshold (ie she needs to spend it)
there are no tax implications (but are you seriously exposed to IHT in reality? If you are, then you should be able to afford a lot more than a token £200 per month. Also you could then claim it was in fact regular payments from your own excess income, which would place it outside of IHT anyway (ie it is not classed as a gift in that context))

Ryan_Holden

Bookworm105 said:

correct
they are gifts that do not impact UC as long as she does not let it build up to above the capital threshold (ie she needs to spend it)
there are no tax implications (but are you seriously exposed to IHT in reality? If you are, then you should be able to afford a lot more than a token £200 per month. Also you could then claim it was in fact regular payments from your own excess income, which would place it outside of IHT anyway (ie it is not classed as a gift in that context))

Thanks. I'm not super informed on Inheritance tax but I am a homeowner with plenty of equity and several pensions, her not living with me or being married to me, so I was just covering base just in case. I am likely not exposed to it thinking about it, I might knock that out of the original post.

Thank you.

Albermarle

Ryan_Holden said:

Bookworm105 said:

correct
they are gifts that do not impact UC as long as she does not let it build up to above the capital threshold (ie she needs to spend it)
there are no tax implications (but are you seriously exposed to IHT in reality? If you are, then you should be able to afford a lot more than a token £200 per month. Also you could then claim it was in fact regular payments from your own excess income, which would place it outside of IHT anyway (ie it is not classed as a gift in that context))

Thanks. I'm not super informed on Inheritance tax but I am a homeowner with plenty of equity and several pensions, her not living with me or being married to me, so I was just covering base just in case. I am likely not exposed to it thinking about it, I might knock that out of the original post.

Thank you.

The £3000 gift limit for IHT is widely misunderstood anyway.
If you give more than that away pa you can not make your self liable for more IHT, than you would have been if you did not make the gift. So do not worry about it in this context.

Ryan_Holden

Albermarle said:

Ryan_Holden said:

Bookworm105 said:

correct
they are gifts that do not impact UC as long as she does not let it build up to above the capital threshold (ie she needs to spend it)
there are no tax implications (but are you seriously exposed to IHT in reality? If you are, then you should be able to afford a lot more than a token £200 per month. Also you could then claim it was in fact regular payments from your own excess income, which would place it outside of IHT anyway (ie it is not classed as a gift in that context))

Thanks. I'm not super informed on Inheritance tax but I am a homeowner with plenty of equity and several pensions, her not living with me or being married to me, so I was just covering base just in case. I am likely not exposed to it thinking about it, I might knock that out of the original post.

Thank you.

The £3000 gift limit for IHT is widely misunderstood anyway.
If you give more than that away pa you can not make your self liable for more IHT, than you would have been if you did not make the gift. So do not worry about it in this context.

Apparently so given I got it wrong myself! Thanks for the clarity on that. 

MetaPhysical

I am in a very similar situation to the OP.  Because of children related matters - long story I won't go into - I do not live with my fiancee at the moment nor have I ever lived with her.  I have been giving her £800 a month bank transfer for three years to keep her above the water line or else she'd lose her home.  All of this gets spent on essentials like her mortgage and bills. We plan to marry in 18-24 months.  She is not on any form of credit nor any child allowance.  Does she (or do I) have any HMRC liabilities? Spoken with colleagues at work and several of them are doing this to help their girlfriends/fiancees so this seems to be a common arrangement.

Albermarle

MetaPhysical said:

I am in a very similar situation to the OP.  Because of children related matters - long story I won't go into - I do not live with my fiancee at the moment nor have I ever lived with her.  I have been giving her £800 a month bank transfer for three years to keep her above the water line or else she'd lose her home.  All of this gets spent on essentials like her mortgage and bills. We plan to marry in 18-24 months.  She is not on any form of credit nor any child allowance.  Does she (or do I) have any HMRC liabilities? Spoken with colleagues at work and several of them are doing this to help their girlfriends/fiancees so this seems to be a common arrangement.

There is no tax on gifts in the UK, so HMRC will not be interested. 

One possible issue is that if you have enough money that your estate will be liable for inheritance tax, and you die within 7 years of making a gift, then the amount over £3kPa will be counted back in to your estate for IHT calculation purposes. However as already said you can not actually increase any potential IHT liability by gifting.

Similarly if you applied to the council to pay for your care, they could take into account gifts you have been making.

However if you are not that old, neither is likely to be that relevant.

MetaPhysical

^^^^Thank you Albermarle

Bookworm105

Albermarle said:

MetaPhysical said:

I am in a very similar situation to the OP.  Because of children related matters - long story I won't go into - I do not live with my fiancee at the moment nor have I ever lived with her.  I have been giving her £800 a month bank transfer for three years to keep her above the water line or else she'd lose her home.  All of this gets spent on essentials like her mortgage and bills. We plan to marry in 18-24 months.  She is not on any form of credit nor any child allowance.  Does she (or do I) have any HMRC liabilities? Spoken with colleagues at work and several of them are doing this to help their girlfriends/fiancees so this seems to be a common arrangement.

There is no tax on gifts in the UK, so HMRC will not be interested. 

One possible issue is that if you have enough money that your estate will be liable for inheritance tax, and you die within 7 years of making a gift, then the amount over £3kPa will be counted back in to your estate for IHT calculation purposes. However as already said you can not actually increase any potential IHT liability by gifting.

Similarly if you applied to the council to pay for your care, they could take into account gifts you have been making.

However if you are not that old, neither is likely to be that relevant.

given @MetaPhysical states these are monthly gifts that have been going on for 3 years, I would think there is a very strong case for showing they are exempt from IHT in the first place under the "gifts out of income" rules. No need to worry about 7 year rule or the £3k limit (although a record of them does need to be maintained for IHT purposes)

IHTM14231 - Lifetime transfers: normal expenditure out of income: introduction - HMRC internal manual - GOV.UK (www.gov.uk)

although I prefer to link to HMRC manuals rather than the very dumbed down .Gov pages, in this instance one of their example is directly relevant: "For example, you can give your child a regular payment of £60 a month (a total of £720 a year) as well as using your annual exemption of £3,000 in the same tax year."
How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK (www.gov.uk)

Ryan_Holden

MetaPhysical said:

Spoken with colleagues at work and several of them are doing this to help their girlfriends/fiancees so this seems to be a common arrangement.

Isn't that a depressing state of affairs for the nation, but I am glad there are other people to step up.

Thanks for all the help folks, I appreciate it.