Split of house sale proceeds

sausage_fingers_4 · 2 April at 3:23PM

Hi all,

My partner and I (unmarried) have recently sold a BTL property in the hope of using the proceeds to buy a home for us down the line. I am in the top tax bracket, whereas she is in the lowest (below her personal allowance). Whilst we are looking for a house we would like to put the cash in easy access savings. We will use our ISA allowances but beyond that will need multiple accounts (for FCSC protection). I am considering gifting my share of the proceeds to my partner so that she pays the tax on any interest from the savings. My questions are:

Is this allowed in the eyes of HMRC?
How is IHT treated?
Are there implications in terms of how the money is then used (i.e. to buy a house that we would jointly own and I would live in)?

Appreciate any guidance you can offer!

eskbanker · 2 April at 3:27PM

Yes, you're entitled to do what you like with your own money, so gifting it to others doesn't need permission from HMRC!

If you were to die within seven years of gifting then the gifted amount would be added back into your estate for IHT purposes.

Not quite sure what the third question is getting at?

sausage_fingers_4 · 2 April at 3:43PM

Thanks @eskbanker. That's helpful. The third question is hinting at beneficial ownership - I would ensure it is clear that she receives the gift. However, when we buy a property and the money that is now solely hers is used to fund most of it, is she transferring beneficial ownership/value back to me?

eskbanker · 2 April at 3:49PM

https://forums.moneysavingexpert.com/discussion/comment/81947638#Comment_81947638

I'm not 100% confident about property ownership aspects but don't believe that 50/50 joint ownership is contingent on the purchase funding being in those proportions, or she could always regift some or all of the gifted money back to you pre-purchase…