Lottery win,treating friends, avoiding the tax man.Possible?
Discussion
Evil Monkey said:
Eric Mc said:
To clarify the various conflicting messages that are being given -
"gifts" from one person to another are completely exempt from UK tax PROVIDED -
e) the gift is given "in anticipation of marriage"
So get engaged to your mate then?"gifts" from one person to another are completely exempt from UK tax PROVIDED -
e) the gift is given "in anticipation of marriage"
Jockman said:
basherX said:
And, for those who worry about these things, it doesn't count as income in the CSA's eyes either. Or at least it didn't when I worked for them, before I became an accountant.
I'm sure the interest will be regarded as income. Or I suppose you could blag it as return on investment. Lol 
Eric Mc said:
"gifts" from one person to another are completely exempt from UK tax PROVIDED -
c) the gift is given out of regular, annual income
So, as a lottery win isn't regular annual income, does that mean a gift from a lottery win would be taxed?c) the gift is given out of regular, annual income
As an alternative solution? Is it possible to draw up a syndicate agreement retrospectively, which effectively gives your friend the percentage required to allow them the gift you want to make? Eg, your friend buys every tenth ticket and is entitled to one tenth of any win. Win £10m and friend gets £1m?
MitchT said:
Jockman said:
basherX said:
And, for those who worry about these things, it doesn't count as income in the CSA's eyes either. Or at least it didn't when I worked for them, before I became an accountant.
I'm sure the interest will be regarded as income. Or I suppose you could blag it as return on investment. Lol Eric Mc said:
"gifts" from one person to another are completely exempt from UK tax PROVIDED -
c) the gift is given out of regular, annual income
So, as a lottery win isn't regular annual income, does that mean a gift from a lottery win would be taxed?c) the gift is given out of regular, annual income
As an alternative solution? Is it possible to draw up a syndicate agreement retrospectively, which effectively gives your friend the percentage required to allow them the gift you want to make? Eg, your friend buys every tenth ticket and is entitled to one tenth of any win. Win £10m and friend gets £1m?
You can give as much as you want to anybody you like and it will not be taxed in any way.
HOWEVER, if you die within 7 years of making the gift, then that gift is treated as if you never gave it away and the value of the gift is added back into the total value of your estate at death for Inheritance Tax (IHT) purposes.
Say you gave £100,000 to some person (it doesn't matter who) but you then died 4 years later.
And say at the date of death your estate was worth £500,000. For inheritance tax calculations, the £100,000 you had given away would be added back to the estate, making a valuation for IHT of £600,000.
A lottery win (or any significant windfall) would never be treated as regular annual income so it would always be part of the estate for IHT. But if you managed to give some of your lottery winnings away and managed not to die for at least another 7 years, then none of the gift of lottery money would be taxed.
Edited by Eric Mc on Saturday 29th November 11:20
MitchT said:
Jockman said:
basherX said:
And, for those who worry about these things, it doesn't count as income in the CSA's eyes either. Or at least it didn't when I worked for them, before I became an accountant.
I'm sure the interest will be regarded as income. Or I suppose you could blag it as return on investment. Lol Does the CSA only deal with your income or your savings too
I mean I pay myself a Dividend from time to time as well as a small salary. Would they look at the Dividend too, even though it is essentially a ROI ??I'm guessing they would
Why wouldn't they?
For many small owner managed businesses, the proprietors take the bulk of their income in the form of dividends.
Certainly, the Tax Credit system want to know dividend and interest amounts.
And people who are running their own limited companies certainly WANT lenders to take dividend income into account when applying for a mortgage.
For many small owner managed businesses, the proprietors take the bulk of their income in the form of dividends.
Certainly, the Tax Credit system want to know dividend and interest amounts.
And people who are running their own limited companies certainly WANT lenders to take dividend income into account when applying for a mortgage.
Eric Mc said:
Why wouldn't they?
For many small owner managed businesses, the proprietors take the bulk of their income in the form of dividends.
Certainly, the Tax Credit system want to know dividend and interest amounts.
And people who are running their own limited companies certainly WANT lenders to take dividend income into account when applying for a mortgage.
It's not just a case of wanting it to be taken in to account on a mortgage application, Eric, they HAVE to - it's on the SA302.For many small owner managed businesses, the proprietors take the bulk of their income in the form of dividends.
Certainly, the Tax Credit system want to know dividend and interest amounts.
And people who are running their own limited companies certainly WANT lenders to take dividend income into account when applying for a mortgage.
Indeed, they even include the Divi Tax Credit in your overall earnings.
MLH said:
I bought my EuroMillions tickets earlier for tonight's draw and as usual went into my post hour fantasising phase which got me thinking.
Say for arguments sake you win a large amount and wanted to give a mate £1million how could you do that without any tax being paid on it?
Im under the impression i just cant transfer that amount and not expect any tax to be deducted from it (unless im wrong) so how about something along the lines of.....buy a £1million car (zonda,veyron etc), give it to them as a birthday present and then get them to sell it back to you for the £1million. Would they then have to pay tax on that?
Ridiculous thread i know but the advice may come in handy one day
You have more chance of being murdered than winning the UK lottery top prize, never mind the Euro one.Say for arguments sake you win a large amount and wanted to give a mate £1million how could you do that without any tax being paid on it?
Im under the impression i just cant transfer that amount and not expect any tax to be deducted from it (unless im wrong) so how about something along the lines of.....buy a £1million car (zonda,veyron etc), give it to them as a birthday present and then get them to sell it back to you for the £1million. Would they then have to pay tax on that?
Ridiculous thread i know but the advice may come in handy one day
Fact.
Centurion07 said:
gregf40 said:
Centurion07 said:
I could be wrong but I think you can gift 3k a year to someone and anything over is supposed to be taxed.
You are very wrong If you don't give the money away and you die you will be taxed anyway - so this point makes no difference.
So if someone is given 6 months to live and has £1m of assets, if they sell up and give it all away to friends/family, when they die they have no money but a huge IHT liability - where/how does this get paid? Would HMRC pursue the recipients? What if they were unaware of the person's health etc?
MitchT said:
So, as a lottery win isn't regular annual income, does that mean a gift from a lottery win would be taxed?
As an alternative solution? Is it possible to draw up a syndicate agreement retrospectively, which effectively gives your friend the percentage required to allow them the gift you want to make? Eg, your friend buys every tenth ticket and is entitled to one tenth of any win. Win £10m and friend gets £1m?
Eric has largely covered it. But to clarify and answer your point. As an alternative solution? Is it possible to draw up a syndicate agreement retrospectively, which effectively gives your friend the percentage required to allow them the gift you want to make? Eg, your friend buys every tenth ticket and is entitled to one tenth of any win. Win £10m and friend gets £1m?
1. A lottery win is specifically exempt from any immediate tax charge.
2. IHT will be payable on death, and the deceased's estate would include any cash or assets left over from the win.
3. ANY gifts by the deceased whilst alive are not taxable at the time of the gift.
4. Any gifts could be taxed later as part of the winner's estate (the 7 year rule).
5. Some gifts are exempt from the 7 year rule so never get taxed, eg marriage gifts (but there is a relatively modest limit for these).
6. A syndicate is treated as winning individually only where a legal agreement to share winnings is drawn up prior to the win. Any sharing of the win without such an agreement is not effective even if the win is shared. This potentially leaves the named recipient with a big tax problem under the "7 year rule".
In OP's case, any gift to his friend will be subject to the 7 year rule, subject to any exemptions eg marriage gifts.
Hope that helps.
skeggysteve said:
Eric Mc said:
"gifts" from one person to another are completely exempt from UK tax PROVIDED -
d) the giver does not give more than £3,000 in any one year
Eric Mc said:
You can give as much as you want to anybody you like and it will not be taxed in any way.
The 7 year rule in the main is how the properly rich & the Royal family pass down wealth from generation to generation tax free.
It is tax planning perfectly legal and unless that rule changes - which if it did would cause big problems for some.
End of the day its such an unlikely situation for anyone its an utterly moot point.
It is tax planning perfectly legal and unless that rule changes - which if it did would cause big problems for some.
End of the day its such an unlikely situation for anyone its an utterly moot point.
Jockman said:
MitchT said:
Jockman said:
basherX said:
And, for those who worry about these things, it doesn't count as income in the CSA's eyes either. Or at least it didn't when I worked for them, before I became an accountant.
I'm sure the interest will be regarded as income. Or I suppose you could blag it as return on investment. Lol Does the CSA only deal with your income or your savings too
I mean I pay myself a Dividend from time to time as well as a small salary. Would they look at the Dividend too, even though it is essentially a ROI ??I'm guessing they would
As regards the interest point above- when I was doing assessments technically ALL income (as opposed to capital) was assessable. However, our average Non Resident Parent wasn't typically the sort to have an extensive portfolio and, in any case, your average Child Maintenance Officer wasn't necessarily qualified to go looking...
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