Tax on Gifts

[lady-janine]

How much money can you give to someone without them having to pay tax on it? does anyone know? can you help me please?

[bednobs]

as much as you like - no gift tax in the uk

[EcclesCake]

I thought it was £3k per annum for anyone other than your spouse.

[lady-janine]

This would be a gift from a sister. Would the £3k stand for every year? She is very elderly, if she dies during the year of gift how do i stand then?
I understand from my bank that if I put money from an ISA into my account I have to pay tax on any interest it might make but not on the money originally from the ISA. Does gift money have the same clause on it?
Should also add that it is my partner's sister and she would be giving money to him but what would be the situation if she also gives me some money. we are not married so i am not really related to either of them. Further help please.

[redcrx]

there would be some tax to pay should she die within 7 years of any payments (it goes on a sliding scale) though that may just depend on how much her estate would be worth.

[factor-fiction]

The only tax that could apply is Inheritance Tax but if any is due it would be charged to the estate and not to the recipents of the gifts.

[dzug2]

There is NO tax on the gift. Repeat NO tax. As bedknobs says there is NO gift tax in the UK.

If you invest the gift then you pay tax on the interest, just as you would if you invested any other money from any source.

Where the £3K per annum comes in is inheritance tax. If the person giving the money dies within 7 years, then their estate is liable to inheritance tax on any gifts they make above £3K a year (and a few other exemptions) - but only if their entire estate, including the gifts, is above the inheritance tax threshold.

[lady-janine]

Thanks for this now i have further questions.
Does this mean that she can give £3k to 5 people in any tax year?

[Dodger666]

As said by others previously, there is no tax to pay on any amount of money given away unless the donor dies within seven years of making the gift. Having said that, even if the donor dies within seven years of making the gift, if their total estate is below the value for inheritance tax(IHT), currently £325K, including the money previously given away, there will be no tax to pay. Even if there is IHT to pay it will come out of the estate of the donor not the recipient.

[dzug2]

<Does this mean that she can give £3k to 5 people in any tax year? >

No - one person only. Or £3000 split between 5 people.

Any number of smaller gifts of up to £250 per person can also be made.

And gifts that are from income, not capital, don't count either.

[lady-janine]

Thank you all very much for your help. Think i am a lot clearer about things now. now to try to explain it all to my oh's sister.

[EcclesCake]

Apologies for confusing matters.