Substantial gift from overseas family

typeractive

Hi all,

I was unsure where to post this so apologies if I have the incorrect board. Long story short my uncle living in Australia (and has done for circa 50/60 years) wishes to gift my 80 year old mother (his sister) a lump of money. He's worried that this will somehow become taxed once shared and asked me to look into it. I'm a bit unsure where to start other than trying copilot which pretty much states it should be fine as long as the money is marked as a gift (which it 100% is).

I just wondered if anyone had experience of this or could point me in a good direction to learn a bit more?

Many thanks for any help :)

Keep_pedalling

There is no gift tax in the UK, so there is no tax to pay on the gift. Considering your mother’s age it could have an impact on IHT on her death.

eddddy

As above, is your mother's estate likely to be above the Inheritance Tax threshold?

If so, in simple terms, this would happen:

• You uncle gifts the money to your mother - no tax to pay
• Your mother leaves that money to beneficiaries in her will - 40% inheritance tax to pay

If that's the case, it would be better for the uncle to gift the money direct to the beneficiaries - and avoid the 40% tax.

I guess another angle is care costs and means-tested benefits. For example, if you have more than £23,250 in assets, the council will not contribute to your care costs (and it's a sliding scale below that).

So if the gift takes your mother's assets over £23,250 and your mother needs care, she might end up having to pay more for her care because of the gift.

If that applies, and for example, if the gift is to help you mother cover month-to-month living expenses, I guess your uncle could do a small gift each month instead, so that your mother's savings don't go over any thresholds.

typeractive

https://forums.moneysavingexpert.com/discussion/comment/82043110#Comment_82043110

Thank you for the quick reply :)
I need to look into the next step as you state - mum's IHT (all new stuff to me)

typeractive

https://forums.moneysavingexpert.com/discussion/comment/82043279#Comment_82043279

Thanks @eddddy

I've just gone and looked at the IHT thresholds (I probably should have started there but I guess my starting point was the money coming in). The .gov website states IHT threshold is currently £325,000 (which I think is per person). Mum and Dad both alive and live together. I do not think their combined assets will be over £650,000, but I wonder if that would differ with my uncles generosity. I'd need to sit and get all the finances out together - a typical thing a lot of families just don't do, but this shows the importance!

I know they plan to pass down property to myself and my sibling and I remember there is some clause that doing so prior to dying in 7 years can be exempt from the IHT (even though they might not hit that IHT anyway), but this might be something for them to consider now which allows them to continue as is, but a reduction in assets if it comes to the care. Or, potentially as you suggest my uncle passes the money to myself and I buy / pay for things for them (which will be hard as mum is a saver (that's where I get it from) I can never get her to treat herself….I guess I could just change all that and treats galore! lol). I know she wants to change the garden so it will be handy for that….maybe I'll get them a hot tub too! lol

Probably more for me to learn about this. I like the other idea of the drip feeding, I guess a question of that is time.

All of this is really appreciated - thank you! :)