Lottery win,treating friends, avoiding the tax man.Possible?

Lottery win,treating friends, avoiding the tax man.Possible?

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Discussion

MLH

Original Poster:

406 posts

122 months

Friday 28th November 2014
quotequote all
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 smile


Centurion07

10,381 posts

246 months

Friday 28th November 2014
quotequote all
I could be wrong but I think you can gift 3k a year to someone and anything over is supposed to be taxed. Interested to see if that's not the case also.

Big Pants

505 posts

140 months

Friday 28th November 2014
quotequote all
I've often wondered this too, but sadly have yet to be presented with the challenge.

I believe there may be some mullarkey permissible with a charitable trust that your would-be benefactors can apply to for support. Hopefully someone far wiser will be along in a minute to disabuse me of that notion. But in reality I suspect the brutal truth is that HMRC will be collecting a goodly proportion of your winnings, in addition to the 20% they already see in VAT. I guess I'd still be happy with the remainder.

My biggest win in recent memory has been £3.60, so I'm holding off setting up an offshore trust for now.

basherX

2,464 posts

160 months

Friday 28th November 2014
quotequote all
The government has yet to tax gifts.

Centurion07

10,381 posts

246 months

Friday 28th November 2014
quotequote all
basherX said:
The government has yet to tax gifts.
So you can just give someone a million quid on their birthday and they get to keep the full million? Really?

Jockman

17,912 posts

159 months

Friday 28th November 2014
quotequote all
Apologies if I'm misreading things guys but if you win £10 million it is ALL tax free. And you give it all out tax free.

My understanding is that it forms part of your estate so the money you give to mates falls within the 7 year rule ie a portion is added back to your estate at different % over the 7 years if you were to die. If you live the 7 years then your mate pays zilch tax.

You can give the lot to your wife without activating the 7 year rule as transfer between spouses is always? tax free.

This would be my understanding of the taxation laws whilst consuming a 2004 Pauilac smile

Jockman

17,912 posts

159 months

Friday 28th November 2014
quotequote all
Centurion07 said:
So you can just give someone a million quid on their birthday and they get to keep the full million? Really?
Yes, really.....so long as you live for the next 7 years.

If you then fall out with your mate post donation you can wait for 6.5 years then sting them with a tax bill by topping yourself.

That'll 'learn' them as they say smile

basherX

2,464 posts

160 months

Friday 28th November 2014
quotequote all
Centurion07 said:
So you can just give someone a million quid on their birthday and they get to keep the full million? Really?
Yes. If you die within 7 years there'll be tax due from your estate which could be flawed back from the gift if your estate didn't have enough. But otherwise there's no tax to pay

basherX

2,464 posts

160 months

Friday 28th November 2014
quotequote all
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.

Big Pants

505 posts

140 months

Friday 28th November 2014
quotequote all
Jockman, you are funny.

That is all.

Jockman

17,912 posts

159 months

Friday 28th November 2014
quotequote all
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 smile

User33678888

1,141 posts

136 months

Friday 28th November 2014
quotequote all
Yeah, gifts are tax free in this country. Tax is on income, sales, duties, capital gains and death. I think that's plenty.

Threads like this are stupid. If you win big you'll have all the tax advisors you need on the payroll. Else you'll spend your whole life doing admin and not enjoying the yacht...

Ginge R

4,761 posts

218 months

Friday 28th November 2014
quotequote all
Jockman said:
This would be my understanding of the taxation laws whilst consuming a 2004 Pauilac smile
biggrin

basherX

2,464 posts

160 months

Friday 28th November 2014
quotequote all
Jockman said:
I'm sure the interest will be regarded as income. Or I suppose you could blag it as return on investment. Lol smile
Indeed. Actually quite difficult to prove interest income in that setting though, surprisingly enough.

gregf40

1,114 posts

115 months

Friday 28th November 2014
quotequote all
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 smile

Centurion07

10,381 posts

246 months

Friday 28th November 2014
quotequote all
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 smile
Not VERY wrong; if you don't live another 7 years then it WILL be taxed.

Jockman

17,912 posts

159 months

Saturday 29th November 2014
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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 smile
Not VERY wrong; if you don't live another 7 years then it WILL be taxed.
Yup, not sure why the word 'Very' was used but judicious use of a smillie was appreciated smile

Centurion, I believe as is pointed out above that the official line is that it CAN be taxed in the event of death within 7 years. If the tax liability on the estate can be covered by the remaining value of the estate then there would be no need to chase anyone smile

Simpo Two

85,147 posts

264 months

Saturday 29th November 2014
quotequote all
'Potentially exempt transfer'.

Eric Mc

121,776 posts

264 months

Saturday 29th November 2014
quotequote all
To clarify the various conflicting messages that are being given -

"gifts" from one person to another are completely exempt from UK tax PROVIDED -

a) the gift is a genuine gift. In other words, once the gift is made, the giver retains no "interest" in what has been given.

b) the giver does not die within 7 years of making the gift

c) the gift is given out of regular, annual income

d) the giver does not give more than £3,000 in any one year

e) the gift is given "in anticipation of marriage"

Evil Monkey

354 posts

145 months

Saturday 29th November 2014
quotequote all
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?