Gifting My Pension And Tax

[Mike25]

My mum has let her pension build up in her savings account. She wants to split the savings between her 4 kids. When she went into the bank to take out 3k in cash the bank refused her the cash. What will be the implications of a bank transfer of the money regarding the tax on the gift? Can she make 4 transfers of 3k? Will the recipient have to pay tax?

[ToraToraTora]

22:12 irrelevant to this.

[ToraToraTora]

FGS she can divvy up savings it's NOT a pension, stop confusing the man.

[newmodarmy]

We have answered the question asked.

But it would be wrong not to point out potential pitfalls regarding disposal of assets.

[THECORBYLOON]

TORATORATORA, if the mother is in receipt of pension credit, a reduction in savings of £12,000 would make a difference to the amount payable and deprivation of capital would have to be considered by a Decision Maker.

[THECORBYLOON]

TORATORATORA, it's all well and good saying the proposed action won't affect tax but if it were carried out and she were treated as having that £12,000 still for the purposes of entitlement to pension credit, it is worth being aware of that fact.

I 

[Peter Pedant]

My posts are correct and confirmed by buenchico.

Phew that is OK then.

state pension: it seems obvious she just whacks it off to the people she wants. ( as a short amswer)

[Peter Pedant]

"no tax is payable on gifts unless she dies within 7 years then it will be treated as part of her estate for IHT on a taper relief basis" ( one of the usual suspects) .... nope - only if she exceeds the £325k limit which from the discussion is extremely unlikely.

What will be the implications of a bank transfer of the money regarding the tax on the gift? None

Can she make 4 transfers of 3k?  yes

Will the recipient have to pay tax? no

 

[Mike25]

Yes, pension credit. Does that make a difference to the question?

[douglas9401]

Only one thing better than iteration and that's reiteration.

[THECORBYLOON]

As your mum is in receipt of Pension Credit (PC), depending on the reasons for withdrawing money, a Decision Maker may decide it was what is known as, "Deprivation of Capital" and treat her as having the £12,000 in her account still and it would be, "Notional Capital” as it’s not actually in her account.

Deprivation of Capital is not straightforward and I suggest you get in touch with Citizens Advice or a welfare rights advice centre to talk you through the possible consequences of making the transfers.

[Hopkirk]

Don't let Starmer and Reeves know that someone on pension credit can save thousands, or they will cut it.

[andres]

How has she got pension credit with a lot of savings?

[Peter Pedant]

CBL - you asked about pension assignment ( to heirs) and a  recent case - - Staveley

It is here:

https://www.curtisbanks.co.uk/advisor-insight/staveley-case-summary-and-outcomes

[barry1010]

andres, you can have £10k in savings before it affects pension credit. Over that amount and every £1k is treated as £2 a week income so can reduce the amount of pension credit.

Annoyingly, anyone with £2 a week over the threshold and zero savings is entitled to nowt