Child financial assistance

Don841

Our daughter lives on her own and has a mortgage. Her chronic illness has got worse and has meant that she is now on long-term sick leave from her job and is struggling financially.

Obviously, we are going to help out. Does our assistance have to be declared for tax purposes and does it count towards her income? I don't yet know how much will be involved.

Keep_pedalling

Sorry to hear about your daughter. The answer to both your questions is no, there are no negative tax implications for any of you with regards to gifting to help her out.

Flugelhorn

The only thing to mention is if you are anywhere near the IHT threshold and giving money away would reduce your estate's liability .
You can still give this money away but make sure it is recorded as regular payments, out of excess income and does not impact your current lifestyle 

doodling

Hi,

Flugelhorn said:

The only thing to mention is if you are anywhere near the IHT threshold and giving money away would reduce your estate's liability .
You can still give this money away but make sure it is recorded as regular payments, out of excess income and does not impact your current lifestyle 

If they are indeed gifts out of excess income then it is helpful to record that but if they are not then that is fine too.

Basically, if you die within 7 years of making a gift then it is still considered part of your estate for inheritance tax, if you are rich enough for inheritance tax to be an issue.

There are some exemptions to that rule, one is gifts out of income that do not affect your standard of living as noted above, there are also exemptions for specific sums under specific circumstances.

Even if your estate is subject to inheritance tax, giving the money away in the 7 years before you die is no worse than dying with it.

Worrying about inheritance tax should not be a reason to not give gifts.  The only issue that might arise is if you are giving away hundreds of thousands of pounds, in which case the lucky recipients may need to pay some of it to HMRC if the money you have left when you die isn’t enough to pay the inheritance tax bill.