Gifting my son £5k

As I understand the rules, if you didn’t use your £3k gift entitlement in the previous year, you can give up to £6k free of tax liabilities the following year. AFAIK it can’t be backdated any further though.

Humduh I'm sorry to read your post. I don't know what to say. I hope that life is OK for you now

My mum helped me whilst looking for work as i left a secure position to be a carer for her prior to nursing home admission. It was taken back on her death

That’s what I said Din or at least meant to say.

suziewoozie loans made to a third party are part of the estate valuation, as are loans made to you, such as a mortgage which obviously is a deduction.

Woodmouse That is the correct procedure, as I'm sure you know.

I think that some people on here are over thinking this. If you are very wealthy there are plenty of people to advise (look at the Grosvenor Estate). If you are not so wealthy, but are comfortable, start to give it away.

I have a client whose father is a well known artist. Father's been giving away some of his work to his children in order to take into account the tapering rules for life time transfers. But that's another story.

Close relative died just over a year ago, The solicitor was executor and it went to probate. Beneficiaries knew there would be inheritance tax to pay.

All financial records were examined to get the correct valuation of all the assets and this would have included looking for gifts worth more than £3,000 the person made in the seven years before they died, and any other transfers such as putting money into a trust.

Far really no - any debts count as part of the estate I’m sure

I keep thinking I’m missing something on here. If your estate would be over the IHT threshold, you could decide to reduce the tax liability by giving away, say, £100k. If you survive 7 years and then die, the value of the estate would have been reduced by that sum and so less tax is payable. If you decide to keep all your money, then more IHT is payable. No way would more tax be payable. However, if you loaned money and some was still outstanding at your death then it would count as part of your estate. I don’t get what the problem is honestly I don’t - the only question is can you easily afford to give the money away?

That's crafty H1954
I guess you'd also need to put in your will that whatever part of the loan remains unpaid has now been left to him.

(I have no legal knowledge, so hope someone can tell us if this would be all right.)

Just a suggestion; could you make this £5k a loan with a written agreement between the two of you that he pays you back £1 a week? That would not be a gift surely, he would get the money for his home and you haven't gifted a cash lump sum. ?

Well what I’ve realised from this thread is that I’ve nearly survived the seven years now for the big sum of money gifted. ? - fingers crossed for five more months

This is a very simple list of the basic exemptions for those of you who are not clear. It is aimed at those of you who want to make smallish gifts to family and/or friends.You can find more information on the HMRC website.

1. The annual exemption is £3000. It is not £3000 to more than one person but it can be split between more than one person. As stated above, if not used it can be carried forward to the next year, but no further.

2. Gifts on a wedding or civil ceremony- various amounts exempt depending to whom the gift is made. You can make gifts to more than one person getting married in the year.

3. Gifts out of income - provided that these do not affect your own standard of living, they form part of your normal expenditure and that they are regular.

4. Payments to help with living costs for an elderly relative or a child under 18.

5. Small gifts up to £250 - as many as you like as long as you haven't used another exemption for that person. So, if you have 10 grandchildren you could give each of them £250 - out of capital if you want to.

Point no. 3 is useful because if you want to start a regular savings plan for a grandchild for example, you can do so, provided that you meet the rules mentioned.

Coolgran65

We gave our daughters £15k each as they could make good use of it now. We did not take any steps regarding tax and neither did they.

Coolgran You should give each daughter a letter telling them that you are giving them £15k, showing the date of the gift. You should keep a copy with your records.

You can give 3000 a year without any tax implications and can backdate it for three years so can give a block of 9000 if not done so before. My OH has just done this to our daughters

I’m absolutely sure they are not checked. Also giving money away before you die doesn’t mean you pay any more IHT than you would if you just kept it - and if you live for more than 3 years there’ll be less IHT to pay. Also if you’re one of a couple there’s nothing to pay on the first death anyway. If you can afford it and your children will be benefit, just give it to them and be grateful you can help. I know I am

We gave our son the deposit for his first house and have just done similar for our second son. No record of it, other than bank statements. Whose to know what you spent your money on? It could have been to pay for your child's no expense spared wedding, a round the world trip, a beautiful garden makeover, a very expensive piece of jewellery or watch. I do wonder how these gifts are checked and regulated.

I think the rules apply to tax years rather than calendar years.

It needs to be this year because it is for an house purchase in the next six months. From answers I have seen up thread it seems that neither my husband and myself nor our daughter will pay any tax at all so long as we live for seven years after the gift. I was thinking of recording the date to avoid any dispute about that and I suppose to prove that we did not require care at the date of the gift.

Can you not gift money in the December of 1st year and January of the next making it 2 x separate years that way avoiding any tax payment due.

Personally I wouldn’t record it anywhere - it’ll be in bank records but it’s vanishingly improbable that anyone will check. IHT must be about the unfairest tax of all so I’m very relaxed in my attitude towards whether my estate ends up being charged the right amount

If you make a gift to your child how do you record when you make it for the purpose of the seven year rule? Do you have to involve a solicitor or is it enough to write a letter saying: "We Jupiter and Juno give to our daughter Juventas the sum of £X on this day" and then all parties sign it?

It is less likely to attract attention if it is out of disposable income. The small print has words to the effect of 'gifts that do not cause you to lower your living standard'. I gave DS deposit for a house and paid off DD's mortgage.
At present I am paying school fees for GC too, hopefully reducing the inheritance tax payable when we have gone.

I said that upthread floradora. It does not have to be aoon afterwards.

As I said jane!

If you do not reach the tax limit for Inheritance tax you can give away as much as you like every year BUT if you go into a care home soon after they can claim you gave it away to avoid fees .