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Where Taxpayers and Advisers Meet

Contributions to my daughter

Flibbet
Posts: 5
Joined: Fri Aug 21, 2015 1:35 pm

Contributions to my daughter

Postby Flibbet » Mon Jun 10, 2019 1:47 pm

I have two daughters. Let's call them Elder and Younger. Both are in their late 30's. Elder has ADHD, which has held her back a lot. She comes across as well spoken and articulate, but she has had a lot of bad luck with partners and with jobs, though she has held a steady temporary job for the past two years, and is seeking permanent employment with the organisation she is working for. She is single, and lodging, and just about getting through each month with not much left over. She has never been able to make any savings, and I have started paying her £3000/year, which is a tax-exempt amount, which she is putting into an ISA.
Younger has done quite well for herself, has a house, steady marriage, and a family. She is also paying £250/month to Elder, to be saved in her ISA. That should give Elder £3000 from me, and a further £3000 from her sister.
Does the tax-free ceiling of £3000 apply to the amount given, or does the tax authority see an income of £6000?

Does the amount need to be declared? If so, by whom - by the givers, or by the receiver, or by both?

AGoodman
Posts: 772
Joined: Fri May 16, 2014 3:47 pm

Re: Contributions to my daughter

Postby AGoodman » Mon Jun 10, 2019 3:31 pm

No, its £3,000 per donor.

No need to declare it.

AGoodman
Posts: 772
Joined: Fri May 16, 2014 3:47 pm

Re: Contributions to my daughter

Postby AGoodman » Mon Jun 10, 2019 3:34 pm

Just in case there are any misconceptions, you are free to give more than £3k a year.

The excess would not be subject to income tax. It would only come into account for inheritance tax if you died within 7 years of making the gift. A lot of people forget that it is also subject to inheritance tax if you hang onto it and die having it in your possession. If your only aim is tax efficiency (it rarely is) then gifts should be large and early.

Flibbet
Posts: 5
Joined: Fri Aug 21, 2015 1:35 pm

Re: Contributions to my daughter

Postby Flibbet » Mon Jun 10, 2019 7:28 pm

AGoodman - thanks for that. Yes, I realise that I could give a good deal more than £3000, as long as I undertake to live a while, but I'm in a bit of a quandary.
My affairs are a bit more complicated than suggested by this question, and I really need to see an IFA. First, however, I need to prepare myself with the right questions to ask him/her.

I hear what you say about "large and early". I already made a sizable contribution to Younger when she was buying a house. Is there a limit to how much I can give away in the hopes of seeing out the next 7 years?

I have another simple question. It's about your statement "No need to declare it", and I can hardly believe that's the case. It's not like the tax man, not to keep tabs on everything that may eventually be taxable, so if I don't declare it, how would he ever know that the money had been given? It doesn't make sense to me. If I don't declare it, should my daughter do so in a self-assessment?

Jholm
Posts: 57
Joined: Mon Mar 11, 2019 4:22 pm

Re: Contributions to my daughter

Postby Jholm » Tue Jun 11, 2019 8:15 am

Only chargeable transfers need declaring. A lifetime gift becomes chargeable on death if within the 7 year window.

If that were not the case, imagine the volume of declarations HMRC would receive every time someone moved money into someone else's account.....

Jholm
Posts: 57
Joined: Mon Mar 11, 2019 4:22 pm

Re: Contributions to my daughter

Postby Jholm » Tue Jun 11, 2019 8:16 am

Your daughter will not declare it in self-assessment either. Nor is there a limit to how much you can give.


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