Tax implications on a financial gift

[a4cabrio]

I'm in the process of buying a house and my parents have provided me with a £38,000 deposit. My conveyancing solicitor sent me an email/letter on Friday outlining a few things about the deposit which aren't a problem, but the last paragraph stated the gift may have tax implications and that I'd be best speaking to an accountant about this as my solicitor cannot advise me on this situation.

Could someone tell me which tax implications I may face please??

[Eric Mc]

If your parents don't keel over in the next seven years - none whatsoever.

[brickwall]

And if your parents are worried about dying, they could always take out life insurance to the value of the tax liability (which will reduce each year).

[a4cabrio]

Thanks, there's plenty of life left in my parents so all should be fine on that score.

[thepeoplespal]

It is also important that your parents don't have some sort of hold over the deposit you talk about, or else it may be subject to inheritance tax, hence the reference to talking to an accountant. But if the money is freely given it is a potentially exempt transfer. This has a good illustration: http://www.inheritance-tax-online.co.uk/Exemptions...

[williaa68]

Two other things, both remote I am sure (particularly given your comments above):

1. If they went bankrupt shortly after the gift, it could be clawed back by the trustee; and
2. Likewise if they ended up in care and didn't have other assets.

Good luck with the purchase. My parent helped me with my deposit 30 years ago and it is the best thing they could ever have done for me.

[Tiggsy]

brickwall said:

And if your parents are worried about dying, they could always take out life insurance to the value of the tax liability (which will reduce each year).

unlikley thats the case. they would have had to have gifted a LOT more than that for taper relief to be relevant to any of this.