Tax on monetary gift from overseas?

[78Pace]

This is my first post so please be gentle with me :-). My wife's parents are selling the family home (outside of the EU) and wish to give a portion of the proceeds to my wife here in the UK. The sum involved will be considerable (high 5 figures). Will there be any tax to pay when the money arrives in the UK? I've done some Googling and the information there would suggest not, but I have not found any relevant information from within the past year so would like to be sure that no new rules have come into effect. Also do we need to notify any authorities about this for anti money-laundering purposes? If so then what evidence would be deemed acceptable in a situation such as this?

Thanks in advance!

[ellroy]

A gift has no immediate tax issues associated so no income or CGT to pay,for example, until the money starts to earn a return in your wife's name in the UK or where ever else she invests it.

However, a gift of this magnitude would be a Potentailly Exempt Transfer under UK legislation for IHT purposes. This mean that the donor would need to survive for 7 years post the date of gift for it to be excluded from their estate.

Are her parents UK domiciled for tax purposes? Their residence, if so, may well be immaterial for the purpose of the gift as UK IHT law could well still apply.

If not UK domiciled then it is likely that the IHT legislation of their home country may have an impact and you should get them to consult an adviser in that country.

[78Pace]

Thanks for such a quick reply and confirming the tax position here in the UK. My wife's parents are foreign nationals and reside overseas so am I right in understanding that, were the worst to happen, UK IHT would not apply in this situation (but that obviously the equivalent taxes in the foreign country would) ?

[ellroy]

You'll need to check with them, and their advisors I'm afraid, overseas is not my area of expertise.

Most countries have a double indemnity tax agreement so you only pay tax in one place, but IHT can be a tricky area and best for them to get local advice.

[Eric Mc]

The taxes that apply to the parents will depend on -

a) the country in which they are resident for tax purposes

b) the country in which they are domiciled for tax purposes

They are usually the same - but not always.

[78Pace]

That's great - it looks like the best approach will be for her parents to get some local advice too. Many thanks to you both for your help.

[anonymous-user]

Don't worry about it, I've transferd money into the EU a few times, the tax man isn't the issue the bank will want to know the source for money laundering purposes and that's it.

[Eric Mc]

I wouldn't be that casual.

It's LIKELY that there are no tax implications but there could be some - depending on the factors outlined above.

[anonymous-user]

It is that easy done two large tranfers to EU this year, fisrt one to buy a house for cash, which for residence reasons was in my wifes name, lawyer asked is this a gift, if yes we need to tell the revenue? answer no from a joint account, second the deposit for my sons house in Europe, bank asked is this a gift answer no its loan, end of story, no checks done, (which they could have in my case as they were not gifts) bank more interested in the money laundering rules, had to prove I had that sort of money for a proven source, so they want sight of tax returns etc, so the interst is in the source of the money not the reason for the transfer.

[Eric Mc]

I didn't understand any of that. A few full stops, commas and paragraph breaks might have helped.