giving money away how much can you

[peterpop]

If parent's had only £200,000, could they legally give £40,000 too each of their children? Would they legally have to tell the taxman.
Peter.

 

[DontAsk]

If parent's had only £200,000, could they legally give £40,000 too each of their children?

Yes, if they have less than 5 children.

Would they legally have to tell the taxman.

Only if they die within 7 years, in which case inheritance tax may be due, depending on other assets, such as a house.

 

[peterpop]

Hi,

Thank you very much.
What if there were two children, and the parent's only had £80,000, gave half each too the children, and their house was worth £200,000, and that was the full estate, would all have to inform the tax man, or could they just give the £40,000 too each child, and the house would go half to each of them when both parent's died?
Thank you so much.
Peter

 

[WaveJumper]

Some info here:

How Inheritance Tax works: thresholds, rules and allowances

Inheritance Tax (IHT) is paid when a person's estate is worth more than £325,000 when they die - exemptions, passing on property. Sometimes known as death duties.

www.gov.uk

 

[peterpop]

Hi,
Thank you. But that does not seem to answer my question. It seems like on my second question that the parents could give this away and not have to tel the tax man, as their whole monyes only come to £280,000, but just not sure on this?
Peter.

 

[WaveJumper]

The "catch" is as mentioned above the 7 year rule if they gave away money or assets and died within seven years of doing so you could well be hit with inheritance tax, the best advice would be go speak to a tax advisor / solicitor who can advise on the possible outcomes based on your parents total estate and any way this could be mitigated, the small costs they would charge for advice will certainly be worth it considering the sums involved here.

 

[Gyumri]

Gifting money to children

You can give money to your children tax-free up to certain limits. Find out how much you can gift to your children and the potential tax implications.

www.raisin.co.uk

 

[peterpop]

Hi, and thank you all. I thought as long as the whole estate, was not over £325,000, that you not need tell the tax man if you were given just £40,000 each?
Wayne

 

[DefinitelyMaybeUK]

It may well not apply in your scenario, but something else to consider is "deprivation of assets" if the giver is likely to be assessed for care home fees etc:

Deprivation of Assets | Age UK

The rules about care home funding and reducing your assets are complicated. Find out more information from Age UK. Read now.

www.ageuk.org.uk

 

[Alyson Dyer]

If you are “fit, well and not in contemplation of care” at the time of the gift it is not a deprivation of assets