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).