IHT and other taxes on single large cash gifts

2

Comments

  • fuzzzzy
    fuzzzzy Posts: 123 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    DRS1 said:
    How would the parents get the cash for the gift?  If they have to sell something then there is CGT to consider.

    Also given the will they would probably want to give the same amount to both children at the same time.
    They have a large amount in savings, so wouldn't need to sell down any investments. 

    It is only one child getting the gift.
    I agree with DRS1. It would seem a bit off to suggest to the parents that one child get a large gift.

    By all means educate the parents on the fact no IHT would be due (if the house is worth £350k) as long as they would not be offended or uncomfortable having their finances discussed. Maybe then they might decide to give both children a larger gift than £3k.
  • silvercar
    silvercar Posts: 49,303 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    the suggestion could be that one child has a large gift now, as they need it, and the other waits with the will being adjusted to reflect this.
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  • fuzzzzy said:
    I agree with DRS1. It would seem a bit off to suggest to the parents that one child get a large gift.

    This has all been discussed. The second child has a lot more disposable income and is not wanting the gift. He is in fact the one who understands finances better and is actively helping my partner explain things to their parents.
  • fuzzzzy
    fuzzzzy Posts: 123 Forumite
    Fourth Anniversary 100 Posts Name Dropper
    fuzzzzy said:
    I agree with DRS1. It would seem a bit off to suggest to the parents that one child get a large gift.

    This has all been discussed. The second child has a lot more disposable income and is not wanting the gift. He is in fact the one who understands finances better and is actively helping my partner explain things to their parents.
    OK, it would have been helpful if that info had been posted.

    Sounds like both just need to talk to the parents, as it certainly makes more sense to release money now when needed.
  • Ricksen
    Ricksen Posts: 1 Newbie
    First Post
    what are the tax implications if I gift my children say £30,000 while I'm still alive. my estate is well below £325,000. 
  • Nomunnofun1
    Nomunnofun1 Posts: 576 Forumite
    500 Posts Name Dropper
    edited 9 April at 3:20PM
    Ricksen said:
    what are the tax implications if I gift my children say £30,000 while I'm still alive. my estate is well below £325,000. 
    None. The estate is not liable to income tax. The recipient is not liable to tax on the payment. So long as there is no situation where you might be deemed to have divested yourself of assets to avoid care fees, for example, you can gift whatever you wish. 
  • LL_USS
    LL_USS Posts: 299 Forumite
    100 Posts First Anniversary Photogenic Name Dropper
    Tax implications are so complex.
    If the gifted cash is, say 500K, to an adult son/daughter, does the parent need to inform HMRC? I understand that this would need to be entered into IHT403 form if the parent passed away in less than 7 years after the gift, but how can people register that large sum gift?
  • UnsureAboutthis
    UnsureAboutthis Posts: 231 Forumite
    100 Posts First Anniversary Name Dropper
    A couple of points, and hopefully this aids the OP.

    If the parents have indicated they want their hard-earned wealth to go to their children/grandchildren, it is NOT just the IHT you have to worry about, but the possibility of care home fees.

    Some have talked about one child getting a handout whilst the other may not.  The people that are saying that have forgotten the important factor that the parents judging by the OP post here, do have the mental capacity to decide their finances/life and therefore are free, rightly so to give or not to give as they see fit.

  • LL_USS
    LL_USS Posts: 299 Forumite
    100 Posts First Anniversary Photogenic Name Dropper
    @UnsureAboutthis you asked the right questions. I suppose the assumptions here are other things already considered (for e.g. equal treats to all the children and that they are fit to receive the gifts, gifting not depriving the giver thus no implication about care home fees...)
  • LL_USS
    LL_USS Posts: 299 Forumite
    100 Posts First Anniversary Photogenic Name Dropper
    Several times before, it was mentioned in MSE forum that people can buy insurance to cover the liabilities if they die before the 7 years after gifting.
    I will look for another comment like this one
    But it seems to be not right. IHT (if any) is the liability of the person who has received the cash gift, not the one who gifted, right?
    If the person who has given the gift passes away before the 7 years is up then there is no way to avoid any IHT incurring from this gift.

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