Getting out cash.

Of course, no-one from HMRC sits on here all day … BUT if you read the links I posted upthread will see that Connect has been very effective in discovering IHT evasion. Bank records are checked as a matter of course. Large cash withdrawals are a big red flag.

HMRC can and do use social media posts, web browser histories and email records. to build cases against people they suspect of tax evasion.

It takes a matter of seconds for an investigator to search on keyword criteria, say, social media + cash + tax to find posts like the OPs.

My post was in response to the OP thinking that what she writes here cannot be traced back to her. It can and is very easily to do.

Don't discount that GN will be among the social networks that HMRC Connect can trawl. Your IP address will link you to what you post here.

This seems beyond unlikely. If someone said they had murdered their family then police would be able to get permission to link an IP to a user name, but even then, there would have to be substantially more evidence than a post on GN .

The chances of HMRC employing someone to sit on here all day on the off chance that someone asks a question about tax-free gift allowances with nefarious intent are slim to none.

I agree with vegansrock that it is deeply unfair that someone who gets an income from land ownership and rents can give away vast amounts, but a retired 'average Jill' who no longer has an income has to pay tax on gifts to her grandchildren if they come out of the savings she has amassed after a lifetime of working.

I do hope my DC aren't reading this thread.
Don't want them getting any ideas!

I transferred a substantial sum each to my daughter and my son. I did it in two parts to my daughter which raised no questions. I sent my son the whole sum in one go and had my account access blocked. Fortunately as the money had come from an ISA with that same bank which had recently matured, and the recipients were people I had paid before, I soon passed their security checks.
If the sum is substantial, I think the OP can expect the bank to make some checks. If their estates are likely to be subject to IHT, or they expect to need care, they should think twice. Not sure if a financial advisor will consider all aspects.

Banks are pretty cagey about any large-sum transactions, cash or otherwise.

That's strange; I transferred £8000 to my DS yesterday with no issues, queries or questions asked. I'll wait for the knock on my door.....

Thank you for your replies.
I have persuaded DH to get an appointment with a financial advisor.
It's a mine field knowing if we are doing right or wrong.

Chewbacca

^the OP was specifically asking if withdrawing money from the bank to gift to children would^ mean that, should they expire, the money could not be traced by tax authorities.

But it could be traced by HMRC if the OP gifted more than the amount allowed within any given tax year, (plus one tax year back dated if unused) and if she died within 7 years. As OP gave no indication as to what amount of money she's thinking of gifting, I can't imagine why you assume it's iffy

Indeed. So I can’t see why she should wonder whether withdrawing cash and gifting it that way could be traced. Why not just give a cheque (do people still do that?) or a bank transfer?

Banks are pretty cagey about any large-sum transactions, cash or otherwise. I had to go in and see them to pre-approve the distribution of money from my Dad’s will and the cost of a new car. If someone drew out large amounts of cash, the money-laundering team would be all over them like a rash. If (ahem) ‘elderly’ people do that, the first assumption is that they are being scammed (elderly in this case seems to be over 60!).

the OP was specifically asking if withdrawing money from the bank to gift to children would mean that, should they expire, the money could not be traced by tax authorities.

But it could be traced by HMRC if the OP gifted more than the amount allowed within any given tax year, (plus one tax year back dated if unused) and if she died within 7 years. As OP gave no indication as to what amount of money she's thinking of gifting, I can't imagine why you assume it's iffy

Callistemon

NotAGran55

Thank you Monica .
It’s a minefield isn’t it . Just off to calculate how much we gave them in their gap years which must count as gifts!….

Our DC's gap years were well over 7 years ago.

Oh - and I don't remember giving them anything, that was remiss of us.

My youngest son only finished his gap year a year ago in September , at the end of his degree.
The eldest took his before his degree and we are past the 7 years .

As older parents we want our boys to enjoy some of their inheritance whilst we are here to see them them benefit .

I think I will just keep taking the vitamins and hope for the best

Chewbacca, the OP was specifically asking if withdrawing money from the bank to gift to children would mean that, should they expire, the money could not be traced by tax authorities.

Looks distinctly iffy to me.

Whatdayisit

Notagran55 no that is helping with life expenses not a gift.

It'£3000 per adult child. And other gifts can be made to gc ggcs etc and for wedding presents.

I don't think you are right.
"While you’re alive, you can give away a total of £3,000 each tax year to people who are not your exempt beneficiaries without paying tax. This is called your ‘annual exemption’. It won’t be added to the value of your estate when it comes to working it out for Inheritance Tax purposes.

Remember that this is your personal allowance. That means you can give away a total of £3,000. You cannot give £3,000 each to several people. For example, if you had three children, you would have to split your personal annual exemption of £3,000 between them. However, their other parent could do the same."

Why would you want to do something that is basically dishonest

What a silly comment to make. It is not dishonest to use the full amount amount allocated to each one of us, for each tax year, if we are in the financial position to do so. Which, for the record, is £3000 per year and, if you gave away nothing in the previous tax year, you can use that in retrospect. Why try and guilt trip someone for asking about a perfectly legal financial transaction?

NotAGran55

Thank you Monica .
It’s a minefield isn’t it . Just off to calculate how much we gave them in their gap years which must count as gifts!….

Our DC's gap years were well over 7 years ago.

Oh - and I don't remember giving them anything, that was remiss of us.

I'm so pleased, Luckygirl
It seemed so very unfair at the time, adding more stress to an already stressful situation.

When our partner dies we inherit their IHT allowance Luckygirl, so we are covered for £650K. Should be OK.

So complicated.

I am about to receive a refund from the health authority for the money spent on my late OH's care, for which they were legally responsible but refused. I have reversed this decision on appeal.

My plan is to divide it up between the children, as I am sure he would have wished. Surely that must be OK?

If only Monica.

The simplest thing to do is avoid dying for seven years!!

Thank you Monica .
It’s a minefield isn’t it . Just off to calculate how much we gave them in their gap years which must count as gifts!….

NotAGran55 It only matters if you dipped into your savings to pay the rent. If you paid it out of income it doesn't come under any gift rules and, providing you live for seven years after a gift from capital, that too falls out of calculations for IHT. The tax due also goes down year to year as the 7 years passes.

Thank you both for your quick replies. I can’t believe that I have never thought of it before! Perhaps ? I did many years ago and had forgotten.

Just as an aside . Large sums of ‘cash’ being paid into bank accounts or taken out are scrutinised in the background too by the banks .

It’s quite a few years ago that I worked at a bank but we were always on alert to look for anything odd .
I found a £180k laundering going on when I noticed regular large sums leaving an account .

From gov.uk

Exempted gifts

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year - but only for one year.

Each tax year, you can also give away:

wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)

normal gifts out of your income, for example Christmas or birthday presents - you must be able to maintain your standard of living after making the gift

payments to help with another person’s living costs, such as an elderly relative or a child under 18

gifts to charities and political parties

You can use more than one of these exemptions on the same person - for example, you could give your grandchild gifts for her birthday and wedding in the same tax year.

Small gifts up to £250

You can give as many gifts of up to £250 per person as you want during the tax year as long as you have not used another exemption on the same person.

************

NotaGran55

If a child is in full-time education, parents can pay for rent, tuition fees and maintenance without there being any Inheritance Tax implications.

• To cover the child’s rent a parent can pay the landlord or agency by direct debit or standing order.
• Tuition fees can be paid direct to the university.
• A parent can transfer money into their child’s account for general living expenses on a monthly basis.

There is no set limit for maintenance money; however it needs to be considered a reasonable sum to cover things like food, bills and spending money. If it is excessive, HMRC may deem that there is a ‘gift’ element, and this could have Inheritance Tax implications.

www.morrlaw.com/wills-trusts-and-estate-administration/avoiding-student-debt-how-you-can-financially-support-children-and-grandchildren-through-university/

Notagran55 no that is helping with life expenses not a gift.

It'£3000 per adult child. And other gifts can be made to gc ggcs etc and for wedding presents.

I believe it is £3000 total not per person. Check up on the HMRC website before you act! www.gov.uk/inheritance-tax/gifts

A question please if I may as this has got me thinking…

We paid the rent for our 2 sons at university which was more than £6k per year between the 2 of us . Does this count as a gift to them?