Paying off mortgage

lindy4528

Hi

I am in the very fortunate position where my father is offering to pay off my mortgage of £38.000 but have been informed that it is not that simple and that he will have to pay tax on it? Can anyone out there possibly give and advice.
Thanks

UK007BullDog

I am not sure about the tax. I think it has something to do with gifts and inheritance tax and so forth. He needs to speak to an accountant.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/InheritanceTaxEstatesAndTrusts/DG_10010612

Giving money to your children http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916
just to start you off.

Cardinal-Red

Basically, assuming there are no conditions attached to the gift, if your father sadly dies within 7 years of the date of the gift, it will form part of his death estate and, depending on its size, will be subject to IT.

In the meantime though, it's what's known as a potentially exempt transfer and there will be no immediate tax liability for either of you.