Gifting money.
Discussion
You can gift out of your estate £3,000 every year without any fear of tax issues. If you didn't make such a gift last year, you could gift £6,000 this year (i.e. last year's and this year's allowances combined).
You can gift whatever you like out of your normal annual income. Unless you have a very high annual income, £50,000 would be a bit high to make such a claim.
You can gift £50,000 with no tax implication BUT you would have to make sure you don't die within seven years of the date of the gift. If you did, the value of the gift would be added back to the overall value of your estate at the date of death and therefore would be taken into the calculation of the Inheritance Tax (other things being considered).
Gifts between spouses are ignored completely for Inheritance Tax purposes - so getting married would remove any issues.
Finally, the gift must always be a genuine gift i.e. with no strings attached. The legal term for a "gift" where the giver retains some rights to the asset that has been gifted is "gift with reservation of title" and is not looked on as a true gift for legal or tax purposes.
You can gift whatever you like out of your normal annual income. Unless you have a very high annual income, £50,000 would be a bit high to make such a claim.
You can gift £50,000 with no tax implication BUT you would have to make sure you don't die within seven years of the date of the gift. If you did, the value of the gift would be added back to the overall value of your estate at the date of death and therefore would be taken into the calculation of the Inheritance Tax (other things being considered).
Gifts between spouses are ignored completely for Inheritance Tax purposes - so getting married would remove any issues.
Finally, the gift must always be a genuine gift i.e. with no strings attached. The legal term for a "gift" where the giver retains some rights to the asset that has been gifted is "gift with reservation of title" and is not looked on as a true gift for legal or tax purposes.
steveo3002 said:
does the person receiving the gifted money have to prove anything ? as its not money from a cash in hand job /drug dealing /dodgy stuff what stops the tax man wanting some thinking its earnings
If HMRC asked where the money came from, then the recipient would have to prove that it is a gift. That shouldn't be too hard, in reality.EViS said:
steveo3002 said:
does the person receiving the gifted money have to prove anything ? as its not money from a cash in hand job /drug dealing /dodgy stuff what stops the tax man wanting some thinking its earnings
I thought the going rate was $5?Eric Mc said:
You can gift £50,000 with no tax implication BUT you would have to make sure you don't die within seven years of the date of the gift. If you did, the value of the gift would be added back to the overall value of your estate at the date of death and therefore would be taken into the calculation of the Inheritance Tax (other things being considered).
This slightly grates with me - to achieve the maximum benefit in avoiding inheritance tax you do need to survive seven years, yes: but I know people who because of statements like this don't do anything at all. As it's 27 years since I did my last tax exam I cannot remember what benefit you get if you die within seven years (it's something like no saving if you die within three years and it then tapers after that) - but you get no benefit if you don't transfer it. If you do the gift and then die after six years you will have saved a fair bit of the inheritance tax. It's not seven years or nothingFor what it's worth Inheritance Tax (or at least its predecessor) used to have "Lifetime Rates" as well as "Death Rates". Yes, tax was charged on large gifts made whether you're alive or dead.
With UK government needing to find more tax revenue and the public's enthusiasm to soak the rich this is something to bear in mind when making long term plans.
With UK government needing to find more tax revenue and the public's enthusiasm to soak the rich this is something to bear in mind when making long term plans.
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