Gift tax

[jorchard@mathsoft.co]

I understand that a parent can give her daughter ( over 18) a gift of up to £3000 per tax year without any tax implications- is this correct? . I also understood that a parent can give a gift of £5000 to their child ( over 18) on marriage without any inheritance tax implications - is this correct and if the daugher was married 6 years ago can you still give this gift now or does it have to be done in the tax year of the marriage?

[steve@nunn-hayward.c]

Hello,

The £3000 limit you refer to is for Inheritance Tax (IHT). Each person can make a gift upto this limit each year free of IHT. In addition and for 1 year only, the unsed allowance from the previos tax year can be gifted in addition. These limits are per individual so a husband an wife with no prior transfers could give (2*£3000) £6000 each or £12000 in total initially.
Care is needed to ensure other taxes such as capital gains tax (CGT) are not triggered. Cash (Cheques) is not usually chargeable to CGT.
On the marriage query, potentialy some nice lateral thinking but the revenue interprit the rule quite strictly as being "on or shortly before marriage".
Depending on your circumstances and intentions there are other exemptions/reliefs that are possible, but I would need to discuss things in more detail to assess their relevance to your requirements.
If you wish to call I would be please to assist further.

Regards

Steve Cook, ATII
Tax Partner
Nunn Hayward, Chartered Accountants
01753 888211

[TommyP]

I have heard that if a person is given a sum of money, within or upto the limits of the gift tax allowance and the giver die's within 7 years that tax is payable on the amount. Is this correct.

Tommy P

[kevinv]

understood the following from Taxation Web.

A parent gift up to £3,000 *each year* without triggering gift tax. Over 10 years, therefore, £30,000 could be gifted tax-free.

Also, they can use the previous year's allowance (of £3,000) for one
year only. So that allows them to gift £6,000.

Does this limit apply to each gift, on an individual basis? Can a parent gift £3,000 to each child *each year*, £18,000 for 3 children?

[Lee Young]

Kevin - the amount is per donor rather than per donee. Therefore we each have the limit of £3000 per year (or £6000 if last year's allowance was not used).

If that limit is exceeded and the donor dies within 7 years this amount is added to his or her estate to detemine the tax that might be payable.

[haryypotterssecret]

HI

Here is what my mum wants to do.

She just sold her house and after paying the mortgage off has some money left. She is going to give 20 grand to my brother. What kind of tax will her or my brother have to pay. Both are working at the moment so will it go down as extra income?

Thanks

[Lee Young]

It is a gift of capital not income and thereore the only potential tax would be inheritance tax if your mother were to die within 7 years of making the gift.

[Williad]

What would be the best way to handle a gift to buy some land? We want to buy a field nearby, my wife's mother has offered to "advance" us around £20,000 to do this which she will "deduct" from anything she might leave my wife in her will. My wife pays nil or minimal tax, I am higher rate and we have a mortgage of about 60%.
tks

[Peter D]

If this is an unconditional gift then there will be no tax on it unless the mother dies within 7 years and her estate, including the gift are outwith the IHT threshold of £325,000 assuming she is not married. Regards Peter

[EvaM]

Hi,

Does anyone know what can I do if i am trying to buy a property but my deposit which is around 60.000 pounds has been given to me from my mother.I guess it is count as a gift money. Do i have to tax after this amount or not?If yes ho much do i have to pay after it?