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Where Taxpayers and Advisers Meet

cash gifts

wtjl
Posts:1
Joined:Wed Aug 06, 2008 3:02 pm

Postby wtjl » Tue Mar 11, 2003 8:35 am

am i liable to any tax(es) if i gift a sum of money to my father (retired)? Likewise, if he was to gift a sum to me would either he or i be liable ?

thnks

Nigel Lord
Posts:518
Joined:Wed Aug 06, 2008 2:18 pm

Postby Nigel Lord » Tue Mar 11, 2003 9:47 am

wtjl

Providing the gift is made without reservation of benefit (i.e. the donor is does not retain any interest in the cash or any income derived from it), there is no lifetime Inheritance Tax (IHT) to pay on such a gift. The gift would be treated as a Potentially Exempt Transfer (PET).

In the event of the donor's death within 7 years of the PET, some or all of the gift would be treated as part of his estate for the purposes of computing IHT. The proportion thus treated would reduce as follows:

3 years 20%
4 years 40%
5 years 60%
6 years 70%
7 years 100%

Any proportion still liable to IHT would be added to the rest of the chargeable estate and IHT would be charged at 40% on everything exceeding £250,000.

If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.

Nigel Lord
Lord Associates
Taxation & Business Consultants
102 Smarts Lane
Loughton
Essex, IG10 4BS
020 8508 1642 & 07769 931852
lordassociates@ntlworld.com


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