UK Gift tax

[David Coulter]

Hello,

I would like to know if and whether a large cash gift from me, (I am a long time resident and domiciled for taxation in Australia) to a family member who is resident and domiciled in the UK, is taxable by that family member if the transferred money is firstly deposited into a UK account that is in my name before a subsequent transfer to the family member. I understand that if I were to transfer it directly into my family member's account it would be free of any UK tax.

Thank you for your advice.

David

[pawncob]

Gifts to UK residents are not taxable in the U.K.

[maths]

A gift of cash by a non-UK domiciled individual from a non-UK bank account directly to a UK bank account of a UK individual recipient is outside the scope of UK IHT.

However, if the non-UK domiciled individual transfers the cash to his/her UK bank account first and then makes the gift out of the UK bank account this gift in principe falls within the charge to UK IHT as it is the gift of a UK situs asset (whether actual IHT arises depends upon a number of factors).

[LozaACCS]

Maths
Does your post not lead to a planning point.
If the transfer to the UK account was was in a non sterling currency, then would not the subsequent transfer be of excluded property (S157 IHTA 1984) and therefore outside the scope of UK IHT, although there could be CGT implications

[maths]

would not the subsequent transfer be of excluded property (S157 IHTA 1984)

No. A foreign currency UK bank deposit is only excluded property on the death of the owner whereas a lifetime transfer would not be one of excluded property.

[tax_schmax]

Hi.

Not strictly interested in the IHT angles here but I have a frighteningly similar case. A UK resident non dom is set to receive a lump sum from his uk resident non dom spouse. The lump sum arises as a withdrawal of equity from a home rented out in Australia. The Australian home is owned solely by the spouse. Is this a remittance of income? Would this be taxable in the UK in any way?

Thanks

[maths]

How exactly is the "withdrawal of equity" taking place?

[tax_schmax]

Australian mortgages work like a current account mortgage, so equity created from repayments of the principle debt are available as a drawdown.