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Where Taxpayers and Advisers Meet

Tax on gift

roythegrass
Posts:6
Joined:Wed Dec 04, 2013 10:28 pm
Tax on gift

Postby roythegrass » Tue Sep 05, 2023 12:34 pm

If I wish to gift a large amount of money to a friend I believe this will be subject to a sliding scale of tax over 7 years if the payer dies within this period.Who pays the tax the payer or payee? What's the name of this tax and can anyone direct me to a link showing the rules. Thanks. ( This has nothing to do with inheritance.)

maths
Posts:8506
Joined:Wed Aug 06, 2008 3:25 pm

Re: Tax on gift

Postby maths » Tue Sep 05, 2023 1:42 pm

For IHT, lifetime gifts between two individuals are "potentially exempt transfers) [PETS] and an IHT liability o ly arises if donor dies within 7 years. If death occurs then the donee is responsible for any IHT payable.

AGoodman
Posts:1717
Joined:Fri May 16, 2014 3:47 pm

Re: Tax on gift

Postby AGoodman » Tue Sep 05, 2023 5:39 pm

Contrary to appearances, the sliding scale is really irrelevant except in relation to very large gifts (i.e. cumulative gifts in excess of £325,000/£650,000 over the seven year period prior to death).

Before that, the gifts just absorb the donor's nil rate band.

This means that, although the donee is meant to be liable for the tax on gifts, it actually increases the tax on the estate (rather than the donee) until you have exceeded those thresholds.

AGoodman
Posts:1717
Joined:Fri May 16, 2014 3:47 pm

Re: Tax on gift

Postby AGoodman » Tue Sep 05, 2023 6:03 pm

Contrary to appearances, the sliding scale is really irrelevant except in relation to very large gifts (i.e. cumulative gifts in excess of £325,000/£650,000 over the seven year period prior to death).

Before that, the gifts just absorb the donor's nil rate band.

This means that, although the donee is meant to be liable for the tax on gifts, it actually increases the tax on the estate (rather than the donee) until you have exceeded those thresholds.


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