ChatterBank1 min ago
Gifting Money
Answers
No best answer has yet been selected by lady_p_gold. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.No, there is no tax on lifetime gifts in the UK. Repeat no tax.
However, if the donor dies within 7 years of making the gift, then there can be Inheritance Tax to pay. If he survives 7 years no problem (from that point of view - there can be in other ways)
What you are probably thinking of is that there is an annual amount you can give without the gift being counted towards your estate for IHT purposes should you not last 7 years.
So - at the time - no tax.
Later - possibility of tax, which as you say could be horrendous.
The sisters would be liable for capital gains tax on the sale. If they didn't already own their own property and lived in it for long enough to establish it as their residence (don't ask me how long...) they might escape this.
This isn't a tax on the gift any more than if they had been given money and paid tax on the interest from investing that money.
Pedderwo - does your Dad live in the house, or has he lived in it in the past? If so, he could sell it himself and gift the cash to his daughters. If the house has been his main residence throughout he would not have a capital gains tax liability when he sold it, and the daughters wouldn't have one on the cash gift. But if he has lived in the house only for some of the time he has owned it then there could be a CGT liability - though it would probably be reduced from the full amount the daughters would have to pay if they were gifted the house & then sold it.
Either way, the 7 year IHT implication still exists.