Gifting money allowances

zenshi

I’m struggling to know if this is the right sub forum for this query but if not, feel free to move it

My elderly father is wanting to gift me and my brother some money. For some reason, it’s been in my head that he can gift 7K per year without falling foul of the deprivation of assets rule. My brother thinks it’s only 3.5K. 

I had a quick look on HMRC site and came across the 3.5K figure but then it also says he can gift other sums to help with living costs but doesn’t give an amount.

any help appreciated. 

zenshi

Done some research and have found the info I needed.

kempiejon

zenshi said:

Done some research and have found the info I needed.

Do please share.

paulstevo

Yes Im also interested in what you found as this is a topic our family is currently discussing.

zenshi

It appears the 3k gift is correct but I also found this, not on HMRC site but I think a genuine site ( moneyhelper.org) . So to me, it looks like you could gift 6k in total per year. 

If gift has not been made last year for example, it can be carried over to the next year. Still checking things over so other input would be helpful

zenshi

Re reading the pic in above post, it doesn’t state there’s a limit on how many times you can gift £250?!

onomatopoeia99

The site you quoted gives the rules for inheritance tax.  Your opening post mentioned deliberate deprivation of assets, which has nothing to do with the inheritance tax.

What is your father trying to achieve?

zenshi

No intention of deliberately deprivation of assets, not sure how that came across?! He wants to gift me and my brother some money without falling foul of the rules, hence wanting to know the limit

What brought this up was the fact that he wants to help me pay for a new bathroom but insists on me and my brother being treated equally, so would gift the same amount to him. If he popped off a week after gifting, then it would be included in the inheritance tax issue. Might be moot point anyway as he’s prob under the threshold

HappyHarry

I think it was in your original post when you said:

 zenshi said:

For some reason, it’s been in my head that he can gift 7K per year without falling foul of the deprivation of assets rule.

For inheritance tax purposes your father can give away as much as he likes. 

Anything above the annual exemption remains in his estate for 7 years for inheritance purposes, but that’s no reason to stop him giving away more.

Savvy_Sue

zenshi said:

No intention of deliberately deprivation of assets, not sure how that came across?! He wants to gift me and my brother some money without falling foul of the rules, hence wanting to know the limit

Because you said 

zenshi said:

falling foul of the deprivation of assets rule. 

So to reassure you, it doesn't sound as if you need to worry about how much he can give in terms of inheritance tax, because his estate is below the limit for that. 

But there is NO fixed amount before Deliberate Deprivation of Assets may become an issue. 

The questions he needs to ask are:

1. "If I give this money away, will I still have plenty of money to pay for any care I may need in the future?" (carers coming into my home / going into residential care in particular)
   
   
2. If the answer to the above isn't a resounding "yes", then the next question is "Right now, is my health good, or is there any reason to think I may need such assistance in the foreseeable future?" 

So to give practical examples: suppose Flo is in a care home, currently self-paying. She cannot, absolutely cannot, give large sums of money to her grandchildren without possibly running into problems with DDA. Once her money drops to the level where the local authority would have to contribute, they can do a financial assessment, and quite reasonably ask where that £30k went in 2025? And then can treat her assets as if she still had that £30k, and refuse to start contributing. 

Now, her life expectancy may be limited, so she may feel "blow that, kids need help now, I've got enough for another 5 years, but I'm unlikely to live that long."  No-one will ask any questions UNLESS and UNTIL the money is needed for her personal care and support. 

Meanwhile Flo's older brother Fred is living in his own home, independently, hale and hearty, never had a day's sickness in his life. He can give £30k to his grandchildren, and even if he subsequently needs to pay for care, because when he gave the money away there was no expectation that he'd need help, there may be an argument over it (eg if he was 99 at the time, when one might reasonably expect one's needs to increase), but it wasn't deliberate, to get out of paying for care which he didn't expect he'd need.

However, their younger sister Fiona lives in her own home, independently, but has a progressive illness. She can give £30k to her grandchildren, BUT she should expect Questions To Be Asked if she needs to pay care at home, or to go into residential care, but her assets are below the level at which the local authority would start paying - because that £30k appears to have been given away when she could reasonably expect to need the money for herself. 

There are no time limits on this, and there are no financial limits. And we do get people coming on to say that their parents want to give away their house "so they don't have to pay for care". You didn't, you don't have that aim, but I hope it helps to set out some examples. 

zenshi

thanks all. He’s elderly and has old age issues like arthritis etc but nothing like he will need carers in the foreseeable. Apart from his cash, he still lives in his mortgage free property, so if he needs a care home then his house will be sold to pay for it. We’re no trying to get out of that at all. 

It is his money after all, not mine or my brothers. He just wants to do things properly and none of us knew the ins and outs