Large Transaction - Tax?
Discussion
My wife’s parents have sold her Grandmother’s house and are very generously gifting some of the funds to my wife and her Brother.
We’re uncertain as to how much money will be gifted to us, but let’s say it’s in the region of £10,000 - £50,000. It’s also worth noting that her parents are based in Canada!
What’s the best way of transferring such an amount between Canada and the UK in order to incur the smallest fee? I’m guessing we cannot avoid the tax in any form?
Any help is hugely appreciated! Ironically, it’ll be going towards a house move, which means most of it will end up going to the Government in the form of stamp duty!
We’re uncertain as to how much money will be gifted to us, but let’s say it’s in the region of £10,000 - £50,000. It’s also worth noting that her parents are based in Canada!
What’s the best way of transferring such an amount between Canada and the UK in order to incur the smallest fee? I’m guessing we cannot avoid the tax in any form?
Any help is hugely appreciated! Ironically, it’ll be going towards a house move, which means most of it will end up going to the Government in the form of stamp duty!
Why would there be any tax? As I understand it you can currently gift money to anyone tax free as long as the giver doesn't die or need care within a certain number of years (7 I think). Even then it would only affect the giver if they were in the UK.
Put it this way, many parents in the UK help out their kids with deposits etc and there is no tax to pay.
Put it this way, many parents in the UK help out their kids with deposits etc and there is no tax to pay.
There is no limit to cash gifts in the UK in terms of tax.
Exempt Transfer = <£3000
Potentially Exempt Transfer = >£3000
Chargeable Transfer = >£3k but if person gifting dies within 7 years of gifting and IHT may be due.
I say may as taper relief kicks in beyond 3 years. Its a bit of a mine field but if you are confident they wont die then its not an issue unless there is an accident or something.
I am not an expert but this is what I know from going through a whole heap of this type of stuff with elderly relatives who have not planned things very well and ended up in a corner so to speak.
Exempt Transfer = <£3000
Potentially Exempt Transfer = >£3000
Chargeable Transfer = >£3k but if person gifting dies within 7 years of gifting and IHT may be due.
I say may as taper relief kicks in beyond 3 years. Its a bit of a mine field but if you are confident they wont die then its not an issue unless there is an accident or something.
I am not an expert but this is what I know from going through a whole heap of this type of stuff with elderly relatives who have not planned things very well and ended up in a corner so to speak.
red_slr said:
There is no limit to cash gifts in the UK in terms of tax.
Exempt Transfer = <£3000
Potentially Exempt Transfer = >£3000
Chargeable Transfer = >£3k but if person gifting dies within 7 years of gifting and IHT may be due.
I say may as taper relief kicks in beyond 3 years. Its a bit of a mine field but if you are confident they wont die then its not an issue unless there is an accident or something.
I am not an expert but this is what I know from going through a whole heap of this type of stuff with elderly relatives who have not planned things very well and ended up in a corner so to speak.
All that sounds as if it’s irrelevant. OP to confirm that the grandparents are not domiciled in the U.K. Exempt Transfer = <£3000
Potentially Exempt Transfer = >£3000
Chargeable Transfer = >£3k but if person gifting dies within 7 years of gifting and IHT may be due.
I say may as taper relief kicks in beyond 3 years. Its a bit of a mine field but if you are confident they wont die then its not an issue unless there is an accident or something.
I am not an expert but this is what I know from going through a whole heap of this type of stuff with elderly relatives who have not planned things very well and ended up in a corner so to speak.
Alpinestars said:
AndyAudi said:
No idea about Canada but FYI in UK beneficiaries can alter a will for a period of time afterwards (2years?)
Doing this can Avoid tax issues
Eh?Doing this can Avoid tax issues
Alpinestars said:
Should be no U.K. tax. Might be a gift for inheritance tax purposes, in which case the 7 year rule applies, but will only apply if the donee is domiciled (defined) in the U.K. - which might not be the case from what you’ve said.
Canadian tax will need to be checked.
Donee or Donor?Canadian tax will need to be checked.
AndyAudi said:
Alpinestars said:
AndyAudi said:
No idea about Canada but FYI in UK beneficiaries can alter a will for a period of time afterwards (2years?)
Doing this can Avoid tax issues
Eh?Doing this can Avoid tax issues
Good link - appears to be absolutely true.
I guess you need the surviving beneficiaries to get onto a decent solicitor to sort it out: chose a legal firm with young partners, eh (our last solicitor also passed away some years back....must find a new one....any recommendations for the Leicester/Loughborough area?!)
Countdown said:
Alpinestars said:
Should be no U.K. tax. Might be a gift for inheritance tax purposes, in which case the 7 year rule applies, but will only apply if the donee is domiciled (defined) in the U.K. - which might not be the case from what you’ve said.
Canadian tax will need to be checked.
Donee or Donor?Canadian tax will need to be checked.
AndyAudi said:
I’ve re-read OP, Maybe not relevant at all, but I’d assumed Grandparents Deceased & inlaws were selling their estate & not hanging on to all the proceeds, In such as situation tweaking the will may be benefitial to avoid it being seen as a gift from parents. https://www.gov.uk/alter-a-will-after-a-death
If the donors are domiciled outside the U.K. it’s irrelevant. The fact the gifts are received by U.K. resident/domiciled recipients does not trigger U.K. IHT. Ikemi said:
Thanks for the replies; I'll look through these in more detail later this evening. Hugely appreciated! To confirm, my wife's parents are Canadian residents, whereas we live in the UK. The money is from the sale of my wife's Grandmother's house.
They need to be domiciled outside the U.K. Residence is different. Here’s a guide. https://www.gov.uk/guidance/inheritance-tax-deemed...
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