Give or loan towards DD’s down payment?

That was for eddiecat78.

My understanding was that Regular small payments cannot come out of income but that didn't include the annual £3000 exemption - but I might be wrong!

Aveline

You can gift up to £3000 per annum each to family members but it must come out of income. For that reason keep good records. They come in handy when you 'become an estate' aka die!

I do keep good records. Mostly. I don't keep count of small things like holiday travel with, lessons, schooling, clothing etc for GC - is any of that, technically, to be included in the £3000 per annum each? I've asked - the answer is never clear.

Why do these stupid numbers even exist? The amounts for weddings, birthdays, Christmas, and gifts of up to £250 per person - why?

The tax information is a minefield. If you read the HMRC site it does help your understanding. However, I have just seen a 'capital at risk' comment which seems to indicate that the Tax people can examine far more than people realise. I assume, and I haven't had time to explore, that 'capital at risk' covers not using savings to gift. I know the tax people can go back 30 years if they suspect fraud etc and even longer if need be.
I've just finished an 18 month argument with them over the return of interest on my PPI. A nightmare. Eventually I took out a complaint, had to submit evidence AGAIN, but actually got it sorted this time.

I didn't see the 'capital at risk' on HMRC but another site which I can't remember. If you google 'capital at risk' several sites come up.

You can give larger amounts but anything over
*£3k pa,
*allowances for wedding gifts,
*the multiple £250 gifts and
*regular gifts ^ out of surplus income without diminishing your lifestyle ^
is counted for IHT if you die within 7 years. So you should keep a record of all those things you pay for or your executors will have a big headache.

Germanshepherdsmum

You can give larger amounts but anything over
*£3k pa,
*allowances for wedding gifts,
*the multiple £250 gifts and
*regular gifts ^ out of surplus income without diminishing your lifestyle ^
is counted for IHT if you die within 7 years. So you should keep a record of all those things you pay for or your executors will have a big headache.

Thank you.

I'm a vigilant record keeper.

Now, what about little things that just happen - cash, lessons, clothes, holidays, meals out, schooling and uni for GC, etc?

And why??? What on earth are all these rules actually for?

It’s a bit illogical when you think about it, you could draw £250 a week out of the bank and give it in cash to somebody, and nobody would know so you wouldn’t be taxed, or you could pay them by bank debit and the record would be there.

Casdon there are lots of situations like that! Presumably I could give my DD a valuable piece of jewelry (if I had one) and HMRC would be unlikely to find out. But I think we have to assume they do have ways of finding out and the penalties of trying to avoid tax aren't worth it.
I keep detailed records of any gifts and keep a copy with the copies of our wills "for the attention of our executors"

Casdon

It’s a bit illogical when you think about it, you could draw £250 a week out of the bank and give it in cash to somebody, and nobody would know so you wouldn’t be taxed, or you could pay them by bank debit and the record would be there.

Maybe your scenario is answer to, meals out, lessons, clothing, holidays, school fees, random cash sums freely given? It's just cash and nobody cares?

It depends how little the little things are. They need to fall within the allowances mentioned above if you die within seven years, if they are not to be caught by IHT. School fees might be the subject of regular gifts, but there has to be a regular pattern and the money has to come out of surplus income, not capital.
The point is to limit the amount people can give away to avoid IHT.
Casdon, your executors are responsible for declaring gifts you made within seven years of death. Withdrawals of cash with no indication of what it was spent on would be something they had to explain.
Don’t shoot me, I don’t make the rules and would be glad to see an end to IHT - I will have paid quite enough tax during my lifetime.

Germanshepherdsmum

It depends how little the little things are. They need to fall within the allowances mentioned above if you die within seven years, if they are not to be caught by IHT. School fees might be the subject of regular gifts, but there has to be a regular pattern and the money has to come out of surplus income, not capital.
The point is to limit the amount people can give away to avoid IHT.
Casdon, your executors are responsible for declaring gifts you made within seven years of death. Withdrawals of cash with no indication of what it was spent on would be something they had to explain.
Don’t shoot me, I don’t make the rules and would be glad to see an end to IHT - I will have paid quite enough tax during my lifetime.

Thank you.

Don't shoot me for over-asking?

Don't people regularly withdraw cash (say) for use on others excess food costs, lessons, holidays, meals out, gifts, clothes, etc? I understand schooling is a stretch, I keep records of such.

IHT is stupid, we've paid extraordinary amounts in taxes.

All I would say, is hurry up and do what you need to do now because in my mother's case dying within the 7 years hit hard in terms of IHT. It was unavoidable though as I would only have been a minor if she had gifted me the property 7 years earlier and I'm not sure that is allowed?

As for grandparents paying school fees, I'm sure the accountant and solicitor set up some kind of trust with my mother's money when she died. The termly fees were paid direct to the school.

(Sorry to be hazy, I was too young to take much notice).

Joseann

All I would say, is hurry up and do what you need to do now because in my mother's case dying within the 7 years hit hard in terms of IHT. It was unavoidable though as I would only have been a minor if she had gifted me the property 7 years earlier and I'm not sure that is allowed?

I totally agree. A widowed relative of mine sold a huge property and bought her son and daughter a house each ( no mortgages). She also set up financial savings and incomes, out of the sale profit.
She unexpectedly died within the 7 years, it caused a huge amount of anxiety for the beneficiaries.

Your generosity is perhaps outside the norm and might be taking you beyond the limits permitted for escaping IHT Norah. I would take a look at your records and perhaps share them with your accountant. Make sure you can demonstrate what comes out of genuine surplus income without impacting your standard of living, and what comes out of capital. It may be that a different regular pattern of gifting would be more tax efficient. It’s also important to remember that legally I believe the household income is generated by your husband and that’s an important consideration in who makes gifts. I know that of course between you the income belongs to both of you, but HMRC do look at these things coldly and forensically rather than through the eyes of a happily married couple who quite naturally share everything. Don’t let the b*stards catch you out for want of a little advice!!

Germanshepherdsmum

It depends how little the little things are. They need to fall within the allowances mentioned above if you die within seven years, if they are not to be caught by IHT. School fees might be the subject of regular gifts, but there has to be a regular pattern and the money has to come out of surplus income, not capital.
The point is to limit the amount people can give away to avoid IHT.
Casdon, your executors are responsible for declaring gifts you made within seven years of death. Withdrawals of cash with no indication of what it was spent on would be something they had to explain.
Don’t shoot me, I don’t make the rules and would be glad to see an end to IHT - I will have paid quite enough tax during my lifetime.

I really think they would be struggling to find out what you had spent that amount on each week if I’m honest - I’m not doing it by the way, it just occurred to me.

I know both my husband and I can give £3000 each a year. We have a joint account but we also have our own pensions going in to that. We checked it out. Presumably if the only income into the account is one partner that makes a difference.

When it comes to offspring gift rather than loan if you can afford it. We were able to do this for our sons with the only proviso that they paid it forward to their children when the time came for their children to build a secure future.
That way no one feels obliged and it is ultimately a win win for out future generations, hopefully.

You are wonderful moving some of your funds to help your family. So many grandchildren are unable to get on the property ladder these days. Prices/wages/interest rates are making it impossible. My father in law is sat on £1m+ and has adult grandchildren unable to afford a bean. Thankfully my mother has been clever with her
money.

I agree with Mary doll …at least you’ll be able to enjoy it too 🙂🧡

Things might have changed since I was young but I didn't think you could borrow money for a deposit on a house. As it's seen as two debts some mortgage companies don't allow it. If you have the money just give it to them.

Tell them its a loan and when they start to offer to pay it back gift it. If you can afford it. Best of both worlds. That's what I will do.

If you are giving substantial money away, please be aware that if you need care within the near future, the transaction can be "upset". If you don't have the money, Social Workers doing a financial assessment can go through your bank statements over a number of years to see if they can claw back any money.

I gave my daughter and son in law money towards buying their house. I'd rather they benefit now, than when I die. You can't take it with you and life's too short