Unlimited Gifting (IHT avoidance) and borrowing
Discussion
This is something we will ofc be taking professional advice on, but this is more just to see others' experiences and thoughts if they have happened to deal with anything similar.
Parents have recently taken financial planning (/some legal) advice in relation to both IHT and their overall finances for the foreseeable future. This is particularly pertinent at the moment as they are now in receipt of their state pension as well as other private pensions/incomes coming due, meaning their income has increased substantially, well above any level they need/want, and they are looking to offload it to family via gifting for IHT avoidance.
Initial advice is that Unlimited Gifting is a good route for them, i.e. making regular gift payments which they can prove they can continue to make (from income only, not savings/investments) without affecting their current living standards. I understand this gives more immediate relief as opposed to standard lump gifting (otherwise it would be pointless) which is subject to the tapered 7 year rule but with a higher burden of proof to show it meets the reqs. I do not see this form of gifting mentioned much but Telegraph article below which touches on it for those not familiar:
https://www.telegraph.co.uk/money/tax/inheritance/...
I am likely to be a recipient of any gifting they might want to do which will of course be very helpful but far more so if this can contribute toward 'income' when seeking a new mortgage.
Assuming the series gifting can be demonstrated to a mortgage company as being consistent (say proving previous 2 years' consistent receipt of the gift amount) and supplemented by a letter from the gifter confirming that the amounts are gifts given with the intention to continue to do so, and that they are not loans and there is no requirement to pay any of it back, would this contribute toward one's 'income' for the borrowing multiplier? Would this only be a niche thing some lenders might consider, perhaps a lower multiplier applied to the gifted income, or would it be of no consequence whatsoever for borrowing purposes?
We will be taking further advice on all of this next month but does anyone have any direct experience with this or knowledge of how lenders view these alternative (i.e. not from employment or investments) incomes?
Thank you!
Parents have recently taken financial planning (/some legal) advice in relation to both IHT and their overall finances for the foreseeable future. This is particularly pertinent at the moment as they are now in receipt of their state pension as well as other private pensions/incomes coming due, meaning their income has increased substantially, well above any level they need/want, and they are looking to offload it to family via gifting for IHT avoidance.
Initial advice is that Unlimited Gifting is a good route for them, i.e. making regular gift payments which they can prove they can continue to make (from income only, not savings/investments) without affecting their current living standards. I understand this gives more immediate relief as opposed to standard lump gifting (otherwise it would be pointless) which is subject to the tapered 7 year rule but with a higher burden of proof to show it meets the reqs. I do not see this form of gifting mentioned much but Telegraph article below which touches on it for those not familiar:
https://www.telegraph.co.uk/money/tax/inheritance/...
I am likely to be a recipient of any gifting they might want to do which will of course be very helpful but far more so if this can contribute toward 'income' when seeking a new mortgage.
Assuming the series gifting can be demonstrated to a mortgage company as being consistent (say proving previous 2 years' consistent receipt of the gift amount) and supplemented by a letter from the gifter confirming that the amounts are gifts given with the intention to continue to do so, and that they are not loans and there is no requirement to pay any of it back, would this contribute toward one's 'income' for the borrowing multiplier? Would this only be a niche thing some lenders might consider, perhaps a lower multiplier applied to the gifted income, or would it be of no consequence whatsoever for borrowing purposes?
We will be taking further advice on all of this next month but does anyone have any direct experience with this or knowledge of how lenders view these alternative (i.e. not from employment or investments) incomes?
Thank you!
CharlesElliott said:
There might be a lender that does accept this, but most lenders will not count this as 'acceptable income'. Just go look at their criteria.....
Thanks and not surprising at all! I did look at Halifax's criteria/their lending calc previously but just saw dropdown options for 'other income' (then below this 'other income' again from a long list) which I presumed it'd be under but then need specific explanation. You seem to be able to borrow far more than is sensible anyway - someone here a few days ago had a 5x mortgage - just how far are pushing it that you need to rely on an allowance from your parents?
Obviously there's no certainty of how long that parental allowance would run for.
Obviously there's no certainty of how long that parental allowance would run for.
Edited by Sheepshanks on Friday 10th January 20:04
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