Regular Cash gift.

[zebsp125]

Hi,
Apologies if this isn't in the right section. I've tried to find an answer by search and FAQ's but couldn't find one.

My mother in law pays £400 monthly into our joint bank account by direct debit. She has been doing this for 3 years. I realise that the allowance is £3000, but is this per person (wife and son in law)? Should we now declare this amount and pay back taxes? If yes, what is the process to do this.

Sorry for so many questions, the HMRC website is very unhelpful.

Any advice would be greatly appreciated.

[AGoodman]

There are no back taxes. The gifts may be exempt but, if not, they would be potentially exempt transfers (PETs) and only brought into account if your mother dies within 7 years of the relevant gift. At that point, they would be aggregated with her remaining assets to calculate IHT on her estate.

They could be exempt on 2 grounds:

(a) your mother can make exempt gifts of £3,000 p.a. (in total - it is not per recipient)
(b) if your mother is making them out of her excess income (i.e. she has income left after paying her own outgoings), they may well be fully exempt.

In any case, unless your mother is making some other very large gifts, it is unlikely these gifts would ever come into tax (her total gifts over the 7 year period would have to exceed at least £325k and possibly more). Worst case, they increase IHT on her own estate on death.

[zebsp125]

Thanks very much for the reply. She receives pension and a small income from an investment and indeed has money left after paying all of her bills etc.