Gifting £10000 to sister - tax implications?
Discussion
As per title really, I would like to write my sister a cheque for £10000 for no reason other than I want to.
I have not bought anything from her, she has not worked for me, nothing to consider here other than the money changing hands in one direction - it is a gift with no strings attached.
Somewhere in the back of my head I recall that you can gift someone £3000 per year (£6000 if you include the previous year) without the tax man getting into a strop. We are both young enough for there not to be any IHT implications to consider.
Could someone in the know please tell me where I/she stands with the tax man?
Ta very much
I have not bought anything from her, she has not worked for me, nothing to consider here other than the money changing hands in one direction - it is a gift with no strings attached.
Somewhere in the back of my head I recall that you can gift someone £3000 per year (£6000 if you include the previous year) without the tax man getting into a strop. We are both young enough for there not to be any IHT implications to consider.
Could someone in the know please tell me where I/she stands with the tax man?
Ta very much
Eric Mc said:
You can give her as much as you like and there is no direct tax implication at all.
The main issue is what happens with the gift amount if you die within seven years of making the gift. Otherwise, there is nothing to worry about.
This is spot on.The main issue is what happens with the gift amount if you die within seven years of making the gift. Otherwise, there is nothing to worry about.
You can give away whatever you like but if you fail to survive 7 years then there may be inheritance tax due as it would be assessed as part of your estate on a tapering basis.
OP/Eric both correct.
If you've not used your annual £3k you can go back one year, so of your £10k, even if you were to die within 7 years, and assuming an estate in exceeds of £325k, your gift would only be £4K as far as any eventual IHT calculation is concerned.
OP, lovely gesture by the way. Your sister has a great brother.
Merry Xmas.
If you've not used your annual £3k you can go back one year, so of your £10k, even if you were to die within 7 years, and assuming an estate in exceeds of £325k, your gift would only be £4K as far as any eventual IHT calculation is concerned.
OP, lovely gesture by the way. Your sister has a great brother.
Merry Xmas.
)garyhun said:
I guess they could, if so inclined, look into family bank account details and see the £10k transaction?
Just keep the cash in a box and use it for day to day living as well as deposit £200 or so per month into the bank... nice and slowthebraketester said:
To pull out 10K of a bank account they usually quiz to to its whereabouts and what its being spent on.
Just lie.. its a bank, and its your money. you have no legal obligation to be truthful about this to them.but the point still remains even if i remove the sillyness.
how would HMRC know if i "lost" it or "gifted" it without me or anyone else involved specifically telling them?
I cant see them going through your entire life with a fine tooth comb over £10k of your own legally obtained and taxed money that you have chosen to do with as you wish ?
SystemParanoia said:
Just lie.. its a bank, and its your money. you have no legal obligation to be truthful about this to them.
but the point still remains even if i remove the sillyness.
how would HMRC know if i "lost" it or "gifted" it without me or anyone else involved specifically telling them?
I cant see them going through your entire life with a fine tooth comb over £10k of your own legally obtained and taxed money that you have chosen to do with as you wish ?
You are probably right.but the point still remains even if i remove the sillyness.
how would HMRC know if i "lost" it or "gifted" it without me or anyone else involved specifically telling them?
I cant see them going through your entire life with a fine tooth comb over £10k of your own legally obtained and taxed money that you have chosen to do with as you wish ?
What if you lent the money, interest free, but did not want it back for 50 years or so?
Eric Mc said:
SystemParanoia said:
Just lie.. its a bank, and its your money. you have no legal obligation to be truthful about this to them.
Er - not quite.Lying to HMRC is a criminal offence.
The op is also possibly not planning on dying in the next 7 years.
But its not on that a bank can question you on your motives with your own money.. effectively holding you to ransom unless you tell them something.
Lying to HMRC is not the same as not telling them ( IMHO )
ellroy said:
OP/Eric both correct.
If you've not used your annual £3k you can go back one year, so of your £10k, even if you were to die within 7 years, and assuming an estate in exceeds of £325k, your gift would only be £4K as far as any eventual IHT calculation is concerned.
OP, lovely gesture by the way. Your sister has a great brother.
Merry Xmas.
Well, that's just a wild assumption as his sister could be writing out a cheque to him, right now, for £100k, thus making him look a total tightwad ballbag. If you've not used your annual £3k you can go back one year, so of your £10k, even if you were to die within 7 years, and assuming an estate in exceeds of £325k, your gift would only be £4K as far as any eventual IHT calculation is concerned.
OP, lovely gesture by the way. Your sister has a great brother.
Merry Xmas.
Re the gifting, post dating the £4K balance into the New Year would use up next year's allowance leaving only £1k at IHT risk?
The IHT discussion is a red herring in considering whether to make the gift or not.
Let's say you die in one years time with an estate subject to IHT:
- If you've given the £10k to your sister, IHT will be due on it as it will be deemed to be part of your estate
- If you haven't given the £10k to your sister, IHT will be due on it as it will be part of your estate
In other words the only tax consideration is that there is a potential IHT saving if you survive the 7 years. This isn't a reason to make (or not make) such a gift.
Let's say you die in one years time with an estate subject to IHT:
- If you've given the £10k to your sister, IHT will be due on it as it will be deemed to be part of your estate
- If you haven't given the £10k to your sister, IHT will be due on it as it will be part of your estate
In other words the only tax consideration is that there is a potential IHT saving if you survive the 7 years. This isn't a reason to make (or not make) such a gift.
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