Inheritance Tax What constitutes a gift.
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Cardew
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in Cutting tax
HMRC publications on Inheritance Tax are quite clear about the amount of monetary gifts that are allowed - £3,000 pa, £250 to anyone, wedding presents, gifts from surplus income etc etc. The 7 year PET ruling is also clear.
Has anyone seen publications of what other expenditure can be considered not to be a gift. e.g
1. If an elderly parent lets an adult child and partner live with them rent free, and he/she pays all the household expenses, food/council tax. – that would cost several £thousands a year.
2. Paying for children and grandchildren to accompany him/her on an expensive cruise.
3. Paying directly(not via parents) for grandchild’s school/university fees.
4. Paying the all the rent for an adult child’s London Flat.
5. Giving their adult children permission to spend on an additional credit card on the parent’s account.
Has anyone seen publications of what other expenditure can be considered not to be a gift. e.g
1. If an elderly parent lets an adult child and partner live with them rent free, and he/she pays all the household expenses, food/council tax. – that would cost several £thousands a year.
2. Paying for children and grandchildren to accompany him/her on an expensive cruise.
3. Paying directly(not via parents) for grandchild’s school/university fees.
4. Paying the all the rent for an adult child’s London Flat.
5. Giving their adult children permission to spend on an additional credit card on the parent’s account.
0
Comments
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You can find the government's own Manual here
However, my opinion -- and you may need to take advice from a tax accountant or HMRC themselves is:
1. Not a gift as no transfer of value.
2. If Parent gives the money to the Child to pay for the cruise, then a gift. If Parent pays for the tickets it's questionable, as there's no transfer of value? The Child presumably couldn't resell the cruise tickets for any value, and there's an argument that it's not a gift at all as the Parent benefits but the Child doesn't (Child might not actually want to go on the cruise but only goes to accompany Parent).
3. Gift to Grandchild, but not to Child? So annual personal exemptions may come into play.
4. Gift, whether paid to the Child or to the landlord.
5. Permission itself is not a gift, but the amounts spent and not reimbursed by the Child is a gift.A kind word lasts a minute, a skelped erse is sair for a day.0 -
read the section on "Normal expenditure out of income"
some of your list can be "made" to fall within that rule, but read the associated conditions carefully
pay attention to the ruling given in the case law Bennett v IRC as that can be applied to both school fees and rent0
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