Cash Gift from parents - Do I need to pay income tax on this gift ?

jessmjc

I am about to receive a cash gift from my parents of £100,000.

From an IHT perspective I fully understand that as long as they live 7 years this cash will not form part of their estate and will therefore be free from IHT.

However, as this is a gift to myself, Should I be paying income tax on this money ?

I fully understand I will have to pay tax on the savings that this cash generates but the income tax situation is a little confusing, any help/advice appreciated.

regards

Jessmjc

reddevilled

No you will not have to pay income tax on the gift. You would only fall into problems if you used the money to buy an item which your parents then used (eg a house). Then you may be caught by the pre-owned assets legislation.

grumbler

jessmjc wrote:

However, as this is a gift to myself, Should I be paying income tax on this money ?

NO. Otherwise your parents could employ you, pay the money as salary and avoid inheritance tax

DaveK

You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

sarahlouise210

DaveK wrote:

You lucky git!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Ditto !!! Enjoy !!

surfcat

Does this not fall outside the limits of gifts to me made to relatives?

martinpike

Are you female and single?

;-)

klondyke

surfcat wrote:

Does this not fall outside the limits of gifts to me made to relatives?

It would be a Potentially Exempt Transfer (PET) ie whichever parent making the gift dies within 7 years, then it may be liable for IHT depending on value of total estate. The first £3000 is free from IHT anyway (if no other gifts have been made in this tax year) [£6000 if none made last year].

Whichever parent? Each parent has the same IHT allowance, so if they can each make half the gift to you (eg cheque in their own name) this reduces the potential liability in the event of one dying within 7 years.

I'm sure someone will give the link to Inland Revenue info for full rules.

Main thing is to keep a transparent paper trail in case they have questions later. It could help to make a separate gifts of the first £3000 [or £6000] from each parent so that these will be totally exempt.


hth

sneekymum

klondyke wrote:

Main thing is to keep a transparent paper trail in case they have questions later. It could help to make a separate gifts of the first £3000 [or £6000] from each parent so that these will be totally exempt.

My Mother keeps a "PET Register" of home-made gift certificates declaring the date of the gift, the amount, and who to - she signs these and updates a list which she signs at the bottom leaving no space for insertions. The whole lot then lives in its own lavish folder in plastic sleeves along with photocopies of the relevant bank statements.

Its only those whose paperwork is in a mess that don't last the seven years...
Such records need to be kept for much longer than that in any case.

Garv0r

I'm sure there is an income tax rule that might come in to play here, which arose as a result of fathers gifting their ex wives substainence money.

If "it isn't in your usual lifestyle" to receive such large sums, then I believe it might be subject to Income Tax. I'm guessing it's an attempt to stop money laundering? Again, knowing me I'm completely wrong!

krs_sn

I have a query...I am getting married in July...My future father in Law who lives in Germany wants to make a cash gift of £5000 into my account towards organizing the wedding in the UK...Do I have to pay tax on this amount? what are the implications?