Cash gift from foreign country

by **Dora** on Thu Oct 06, 2011 7:22 pm

My parent-in-law from Hong Kong (no connection to the UK) would like to give me and my husband (UK residents) a cash gift of £500k, will we need to pay any income tax on these amount? In additon, is this gift considered for IHT purpose?

by **pqtaxation** on Thu Oct 06, 2011 8:04 pm

Dora wrote: .... will we need to pay any income tax on these amount? In additon, is this gift considered for IHT purpose?

No to both questions. A gift from a person(s) not domiciled in UK of money situated outside UK is not subject to any UK taxes chargeable on UK resident donees.

Of course after arrival of the gift in your UK bank account, you will have to pay income tax on interest earned and it will become part of donee(s) estate in UK for IHT. So if you want to gift it on (e.g to your children) then it maybe be better for there to be direct gifts to each donee by donor.

by **Dora** on Fri Oct 07, 2011 3:22 am

Thank you very much for your reply!

by **wamstax** on Thu Jan 05, 2012 11:57 am

Remember that if you are self employed or a director of a UK close company the sudden appearance of the interest on £500K or its introduction to your company or the acquisition of expensive assets might just trigger an HMRC enquiry so be sure that you have contemporaneous documentation showing the reason and nature of the gift being provided. HMRC would be alive to the possibility that this £500K could be your own tax evaded monies finding its way back from HK after being "smuggled" out there in the first place.

Of course if you are not self employed or a director of a UK close company forget my red herring