Cash gift from Relative - advice please!

scotgirl

I am to receive a gift of £10,000 from a Grandparent and I need some advice.
What is the best way to receive this whilst avoiding or minimising tax?

Thanks :money:

fengirl_2

This gift is not subject to income or capital gains tax, so there is no impact on you. The gift will count towards the donor's IHT limit and may affect IHT payable by the estate should s/he die within 7 years.

CLAPTON

There is no gift tax in the UK (unless today's budget introduces one); so anyone can give anyone else any amount of money without paying tax.

However, for Inheritance tax purposes if your granddad dies within the next 7 years then the value of the gift will be added to his estate and potentially taxed for IH purposes. However, the estate and not you is potentially liable (if it is above the IHT allowance at the time).

TaxGeek

There is an annual exemption for such gifts of upto £3,000, meaning your grandparent may make a gift of £3,000 in any tax year without it becoming potentially liable for WHT. Further, if the exemption is not used in a tax year it may be rolled forward one year only. Obviously depends on any other gifts made, but if no such gift has been made in this tax year (6/4/07-5/4/08) or the last, then I think it should be possible to gift £6,000 now and £3,000 on 6/4/08 without any IHT risk. (note that the £3,000 limit is on the donor, not recipient).

scotgirl

Thanks for the replies.

I am confused by the conflicting advice though!

Does this mean my Grandparent can just give me the total amount of money or is there a limit of £3000?

Thanks

TaxGeek

There is no limit to the amount they can give you, but beyond the £3k annual exemption it would potentially be subject to inheritance tax were he to die within 7 years of making the gift.

scotgirl

Ahh ok - thank you.