cash gifts to offspring ??

can anyone please shed some light on how much someone can gift cash to their children ?

mrs t’s dad has found a cash isa, which was forgotten about since 2009.  the amount is quiet a lump.

how much can he gift to 3 x children without it causing any tax issues ?

i know a financial person can answer this, but he wont contact one.

I don’t think there’s a tax issue as long as you stay alive for 7 years after making the gift. I think you maybe have to sign a form saying that it’s a gift and that you won’t be wanting it back (or some legalese).

£3,000 per giving person per year (inheritance tax payable if they die within seven years). At least that’s what I think it is without Googling.

Edit: Here’s a Google

There is no tax due on cash gifts. However, if he dies within 7 years of the gift, it may be counted as part of the estate for the purposes of calculating inheritance tax.

this place is awesome…… thanks for the speedy reply fella’s.

it may be counted as part of the estate for the purposes of calculating inheritance tax.

and that is only likely to happen if there is a big chunky inheritance, can’t remember the figures but if it’s under £1m, the tax authorities don’t seem to dig into the estate as far as i understand.

A cash gift is essentially untraceable unless they put it in the bank, who’s to know?

Agree with all the above, with the additional point that unless he has half a million, or a million with his wife*, then it’s a complete non issue.

* Including at least 350k in main residence

A cash gift is essentially untraceable unless they put it in the bank, who’s to know?

It’s not the putting it in the bank that is the issue, it is the taking it out

But also… If the gifter at some future point needs local authority care, the gifts may be considered as Capital Deprivation when they assess the gifters assets and cash. Just be aware.

A cash gift is essentially untraceable unless they put it in the bank, who’s to know?

We gave MissJ a chunk of money to help with buying a flat and we had to declare it on the “source of funds” statement.

We gave MissJ a chunk of money to help with buying a flat and we had to declare it on the “source of funds” statement.

That’s more of a money-laundering issue though.

Keep an eye on the budget – there are likely to be changes to inheritance tax coming up.

I’m pretty sure that the tax free gift limit is £3000 per year, again with the within seven years death rule.

Side issue – what if the old fella paid for food bills etc?

How would that play out?

Helping out towards bills etc could be classed as gifting the money. So long as it’s less than £3k per year, it’s not considered for inheritance tax purposes.

A wealthy person could quite easily swerve the inheritance tax thing by paying mortgages and leasing cars for people. Tax man ain’t stupid so they look at the value of ‘gifts’ like that.

I’m fairly sure 7 year thing is proportionate to the amount of time which has passed since the gift was given.

Ie, if the worst were to happen the day after the gift was given, the whole amount could be included in the value of the estate an inheritance tax could be due. If he were to die 6.5 years after giving the money, the tax liability would have reduced to basically nothing.

I’m not an expert. But I’m sure that somewhere.

That’s more of a money-laundering issue though.

And a debt control/affordability/collateral question. If they’ve lent 100K on the basis of 80% Loan to Value, they need to know that the 20% isn’t a short-term cash loan from another bank.

If you make gifts out of “surplus income”, then you can give any amount and it is not subject to consideration for inheritance tax. You just need to make the gifts as regular amounts and be able to show that giving them doesn’t affect your standard of living. So if FIL drew a fixed sum from the ISAs and distributed that to the kids in regular monthly sums, he could give a lot more than £3000 per year if he wished.

https://financial-advice.co.uk/2021/04/making-tax-efficient-gifts-out-of-surplus-income/

https://hwfisher.co.uk/gifts-out-of-surplus-income-three-rules-to-remember/

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231

IANAIFA

Yep £3,000 a year per person plus a bit extra for birthday/christmas. I have a family member who also pays for things above this for their children /grand children (rather than give extra cash) that they believe won’t flag/leave a trail worth investigating if looked into as they could say it was their expense such as the daughters new washing machine/boiler etc,  not sure how much detail or  investigating is gone into in the 7 year window if someone dies so dunno if this will/wont work. They also pay £3k per grand child towards their uni costs as that is a different person to the parent and as Ben says above, as long as it is surplus income you can use it too. I think surplus income is, say the £5k interest/income you might get from a fund but not the actual capital but again IANAFA

I loaned gave my daughter £50k as deposit for a house recently. I had to sign some waiver of where the money came from etc, so I imagine its a non issue as long as not a million or so.

So if FIL drew a fixed sum from the ISAs and distributed that to the kids in regular monthly sums

This would not count as surplus income because it’s a transfer of capital assets – i.e. it isn’t income.

£3,000 per gifter per year does not need to be declared to anyone at anytime.

The £3000 limit that’s being referred to in several posts is an Inheritance Tax consideration.

The old Gift Tax no longer exists so you are free to make gifts without any tax liability (unless you pop your clogs within 7 years).

Well yes – that’s what everyone has been saying.

Genuine question out of curiosity, not intending to hand out any money in the near future !!!

What if someone you wanted to be the recipient of said funds,  was to win it off you in a high stakes poker game ?

I know you don’t pay tax if you win in a casino , or bookies etc, but would you be liable if done privately ?

You can retrospectively claim the 3k gift allowance if you have gifted money and die within 7 years.

If there’s no iht due hmrc aren’t interested, but when hmrc are collecting 40% of anything they find, they scrutinise everything.

Likely to change next week in budget.

Genuine question out of curiosity, not intending to hand out any money in the near future !!!

What if someone you wanted to be the recipient of said funds,  was to win it off you in a high stakes poker game ?

I know you don’t pay tax if you win in a casino , or bookies etc, but would you be liable if done privately ?

I did a bit of googling, out of curiosity, so by no means a definitive answer, but in theory a private bet such as friday night poker round your friends house is indeed tax free….

However it’s gonna look sus-as hell if you were to ‘win’ a huge sum of money from a parent or grandparent, what a coincidence! maybe it would come down to balance of probability and if you can realistically prove it was a legitimate bet…. I’m sure there must me more to it, otherwise we’d be seeing a lot of people who suddenly became huge poker enthusiasts, despite being ‘very bad at it’, when they are close to death…you can’t be the first person that’s pondered over such a huge potential loophole…?

reminds me the time my friends dad took £50k out the bank, and went to the horses at york, he came back penniless.

cash is king and all that :0)

my friends dad

Your dad is very generous.

Your dad is very generous.

I think if you were to be investigated, dad withdrawing 50k cash, which he then proceeded to ‘lose the lot at the races’ and son suddenly depositing 50k cash would set alarm bells ringing?! I dunnno though,

I’m likely to be down this rabbit hole very soon with my dad. His terminal diagnosis means he is likely to die within 1-2 years as a best case scenario, but has some money in the bank that is just sitting there. His estate wont be over the current threshold mind, probably £100k short of that. It’s all a minefield.

the amount is quiet a lump.

So hush money then, what have they got on you?

Cash in a brown envelope is the solution.  But make sure they don’t put 1 big wedge into a single account at the same point otherwise it becomes traceable again (or they’ll have to declare it as income from prostitution when the bank asks)

Open a Turkish Barbers?

A cash gift is essentially untraceable unless they put it in the bank, who’s to know?

Oh you sweet summer child….

His estate wont be over the current threshold mind, probably £100k short of that. It’s all a minefield.

If it’s under the threshold it’s not a minefield at all.  It may change in the upcoming budget but under current rules you can inherit up to a million quid tax free with a bit of estate planning.

But it’s not estates like this that are a huge issue for the UK tax payer.. It’s big tech, pharmaceutical and energy companies, etc. that don’t pay tax in the magnitude of multiple billions.

Estates of private individuals are litteraly nothing compared to that, unless your surname happens to be Windsor or Grosenver.   😉

Not too sure the mechanics in the modern age, but historically the most effective way of preserving, transferring and realising assets was gold and jewellery, especially the gold part.  So for those inclined to try and keep things from the prying eyes of HMRC I would investigate the mechanisms of how to purchase and sell physical gold.

It all depends on whether the estate will be taxable when he dies.

You can gift any amount that you like as long as you survive 7 years after making the gift. If he dies in the 7 years some will be deemed to be in his estate.

If this will be the first tax year that he has given gifts his gifting allowance is £6,000 (you can roll back one year) if he has been using his allowances previously then the gifting allowance is £3,000.

If his estate will not attract inheritance tax then it is a non issue in any case. Although don’t assume that under £1m means no IHT as it is not that simple and his exact allowance will depend on circumstance.

And it is all probably going to change next Wednesday in any case. Lifetime gifting is rumoured to be in Ms Reeve’s firing line.

Oh you sweet summer child….

There will be some legal paperwork being served at STW Towers next week…

Full disclosure, i pay zero tax to HMRC so my details are of no use to you.