Avoiding paying tax on a gift.

WindfallWendy

Gimmeaminute said:

My wife doesn't want to tie the money up in pensions as she is only 45 and wants to be able to access the cash on a whim if she fancies a holiday or a used car or whatever. We have the rest of our time planned out already, we both have 2 x DB pensions and we paid off our mortgage about 12 years ago. We're just trying to maximise returns from the £200K and give our useless government as little as we possibly can.

If you have £100k in PBs, and £80k in ISAs by 8th April, there is plenty easily accessible for whim spending!! If you have an investment builder attached to your pensions, £10k each added now should give a nice return over the next 10 years and will also see you pay less income tax if you can get it paid in through your employer (I did this when I had a USS pension and had a couple of months of not paying any income tax which was rather nice).

Hoenir

Should your MIL retain some of the money herself to a later date? If paying a small amount of income tax is a major issue for yourselves. 

eskbanker

Gimmeaminute said:

eskbanker said:

Gimmeaminute said:

My wife doesn't want to tie the money up in pensions as she is only 45 and wants to be able to access the cash on a whim if she fancies a holiday or a used car or whatever. We have the rest of our time planned out already, we both have 2 x DB pensions and we paid off our mortgage about 12 years ago. We're just trying to maximise returns from the £200K and give our useless government as little as we possibly can.

Entirely understandable to want to have easy access to a chunk of money for luxuries, etc, but presumably there's no need to have it all readily available like that?

Spot on. We're relitively frugal and have the rest of our lives planned out, so just need a bit of 'on a whim' cash, the rest we would like to mostly give to our kids for uni expenses, car, house deposit etc. Ideally don't want this wasteful government to get anything.

The wording in bold is much more constructive and informative than the repeated sideswipes about the government - you hadn't even mentioned kids before, but if you're wanting to help them then feeding the likes of junior ISAs for them is tax-efficient, provided you're happy that they control the money at 18.

And to follow up on the post above, is it wise for your MIL (presumably in her sixties at least) to be giving away so much, i.e. does she still have more than enough to fund care in later life, for example?

Gimmeaminute

Mil has lived with us for 15 years and is approaching end of life. We live in Scotland and she wants to dispose of her assets as she wishes, she does not want to have the restrictions that wills in Scotland will place on her. Up here you can't just give what you want to who you want, it is a lot more complex.

Section62

Gimmeaminute said:

My MIL has just gifted myself and my wife the best part of £200K.

Not really related to tax - but is there clarity whether the amount is given separately to each of you in equal amounts vs given to one of you to share between you?  A letter written by your MIL stating her exact wishes might be useful later.

You might also want to consider whether it might be better for her to gift some of the money to the grandchildren directly.

MEM62

Gimmeaminute said:

My wife doesn't want to tie the money up in pensions as she is only 45 and wants to be able to access the cash on a whim if she fancies a holiday or a used car or whatever. 

Sort sighted in my opinion.  £200K is far more than enough to meet any whims that you have and more that most would see in a lifetime for such expenditure.  The return you would get from putting some in a pension would be significant.  You can get £80K into ISAs over the next couple of months and another £100K into premium bonds.. Why not put the remaining £20K into pensions?    

Albermarle

and give our useless government as little as we possibly can.
Ideally don't want this wasteful government to get anything.

Please note the forum rules ( and you will also get more responses if you do)

We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Nebulous2

Has she considered the possibility of falling foul of the rules on deprivation of assets? 

Gimmeaminute

So, we have spoken to a solicitor in Scotland who has confirmed the best way forward. The money will be held separately from ours in case my MIL does need care, in which case we will give it back to her. IHT is not an issue as current assets and gifts over the last 7 years are nowhere near the limit.

The reason for me posting was to get some ideas on how to protect the cash from tax in the short term.

Thanks for all the posts, especially from those trying to help..