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Cash gift
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What is the maximum sum I can give as a cash gift to a non family member without them having to declare it for tax?
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You don't pay income tax on gifts, so I dont think they would have to declare it.
You should keep a record if it is likely to cause an inheritance tax liability for your estate.
http://www.direct.gov.uk/MoneyTaxAndBenefits/T axes/InheritanceTaxEstatesAndTrusts/Inheritanc eTaxArticles/fs/en?CONTENT_ID=4016736&chk=03jq r%2B
If the gift is under �250, or a wedding present of under �1000, or you give away less than �3000 in one tax year (+ any of last years �3000),there is no Inheritance tax to pay.
You should keep a record if it is likely to cause an inheritance tax liability for your estate.
http://www.direct.gov.uk/MoneyTaxAndBenefits/T axes/InheritanceTaxEstatesAndTrusts/Inheritanc eTaxArticles/fs/en?CONTENT_ID=4016736&chk=03jq r%2B
If the gift is under �250, or a wedding present of under �1000, or you give away less than �3000 in one tax year (+ any of last years �3000),there is no Inheritance tax to pay.
I pressed the wrong button!
If it's more the it is a potentially exempt transfer, after 7 years it is disregarded but if you die within 7 years it is added back to your estate (if anyone tells the tax man about it) and uses up some of your allowance of �285,00, that is free of Inheritance Tax.
If the gift itself is bigger than �285,000 then the recipient may have to pay Inheritance tax on it (on a sliding scale, depending when you die)
Read the site yourself, in case I've got it wrong, or take advice if large sums are involved.
If it's more the it is a potentially exempt transfer, after 7 years it is disregarded but if you die within 7 years it is added back to your estate (if anyone tells the tax man about it) and uses up some of your allowance of �285,00, that is free of Inheritance Tax.
If the gift itself is bigger than �285,000 then the recipient may have to pay Inheritance tax on it (on a sliding scale, depending when you die)
Read the site yourself, in case I've got it wrong, or take advice if large sums are involved.
Tne thing that surprised me was that if you gave away, say, �200,000 and died 6 years later it uses up a full �200,000 of the tax free part of your estate.
But if you gave away 400,000 and lived 6 years the �115,000 would be taxed a lot less.
Either way your heirs will pay more tax on their share (as a proportion of what they get).
But if you gave away 400,000 and lived 6 years the �115,000 would be taxed a lot less.
Either way your heirs will pay more tax on their share (as a proportion of what they get).
If it is the estate / executors who pay the tax (if I die within the 6-7 years), and if they are also beneficiaries from the will, then there is no incentive for them to declare a gift that would have been made to a third party (unless it is a large sum). Also, if they were genuinely unaware of the gift it is not in the interest of the recipient to inform them. Either way the tax man misses out and no one is intentionally defrauding anyone else except myself and I would be dead anyway. If I am still alive at that point the money is legitimately disposed of and no one has defrauded anyone. Is this the case? It seems too simple. Or have I missed something obvious?
Question time indeed.
But surely they can't look at everyone's finances in that detail, so maybe your heirs would be in luck.
And the Revenue men would be hard put to prove that they knew about it, so the worst that could happen (surely) is they had to pay what they owed anyway.
But since you are all law-abiding people you will leave them the documentation, and they will declare it, not lose it.
But surely they can't look at everyone's finances in that detail, so maybe your heirs would be in luck.
And the Revenue men would be hard put to prove that they knew about it, so the worst that could happen (surely) is they had to pay what they owed anyway.
But since you are all law-abiding people you will leave them the documentation, and they will declare it, not lose it.
Sorry dancecaller but the onus is not on the Taxman, it is upto the taxpayer to declare these things and ignorance is no excuse. Agreed they can't keep an eye on everyone so that's why you have certain forms to complete when someone dies, then of course that person's record will be pulled and once satisfied all has been investigated and paid/refunded the tax record will be closed. Hence any funny business and you haven't declared it = FINES as well as having to still apy the missing tax.
So suppose I was a bloke (I'm not) with a child I didn't want to admit to (or an ex-mistress), and I gave her some money and didn't tell my kids.
Surely the Revenue could expect them to know.
I remember that when my mother-in-law died, the solictor who was executor didn't know as much about her affairs as we did, and got things wrong (not tax)
Surely the Revenue could expect them to know.
I remember that when my mother-in-law died, the solictor who was executor didn't know as much about her affairs as we did, and got things wrong (not tax)
The main point in any of this is not who knows what but the forms you must complete for the Taxman when somebody dies. This alerts them that the estate needs to be wound up and the Revenue will ask the questions if chunks of money are missing that were previously invested etc. Remember the Revenue also receives annual returns from financial institutions. They ask the question and the executors must answer ( as they will have access to bank records - large cash withdrawals and dates on bank or whatever statements.
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