Can someone give someone else a large sun of money without tax implications?


B

bevbot100

My Dad has recently come into a large sum of money and wants to share
this with his family. We arnt sure if there are any legal/tax
implications of him just writing out big cheques?

....the only one we can think of is inheritance tax. ie if he dies
within 7 years then it will count as his estate.

Are there any other implications? Do I need to tell the tax man? Will
the bank tell the tax man?


Thanks

Bevbot
 
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T

tim\(yet another new home\)

My Dad has recently come into a large sum of money and wants to share
this with his family. We arnt sure if there are any legal/tax
implications of him just writing out big cheques?

...the only one we can think of is inheritance tax. ie if he dies
within 7 years then it will count as his estate.
How did he come into this money. It may be possible to
change the way the money is distributed by the source to
avoid this problem.
Are there any other implications? Do I need to tell the tax man? Will
the bank tell the tax man?
The bank will tell the taxman. You haven't done anything that
the tax man needs to know about, but the bank doesn't know
that. You need to keep the evidence of where the money came
from, just in case.

tim
 
J

John Boyle

In message said:
My Dad has recently come into a large sum of money and wants to share
this with his family. We arnt sure if there are any legal/tax
implications of him just writing out big cheques?

...the only one we can think of is inheritance tax. ie if he dies
within 7 years then it will count as his estate.
Yes, thats right. Also, if he is giving away any investments that he
received, as opposed to cash, then if those investments have increased
in value since the date of death of the legator, then CGT may come into
it, You could get the will varied by deed of vaiation so that the
intended beneficiaries of his gifts become beneficiaries of the estate
so as to avoid this. A will can be changed up to 2 years after dath so
long as all beneficiaries agree.
Are there any other implications?
ONly as above
Do I need to tell the tax man?
Not unless he decides to put some dish into a trust.
Will
the bank tell the tax man?
Not about the gifts.
 
J

John Boyle

"tim(yet another new home)" said:
The bank will tell the taxman.
Why would they do that?
You haven't done anything that
the tax man needs to know about, but the bank doesn't know
that.
But that doesnt mean they would tell the tax man about the gift. They
will tell the taxman about any credit interest paid, but not about the
gift.
 
R

Robert

My Dad has recently come into a large sum of money and wants to share
this with his family. We arnt sure if there are any legal/tax
implications of him just writing out big cheques?

...the only one we can think of is inheritance tax. ie if he dies
within 7 years then it will count as his estate.

Are there any other implications? Do I need to tell the tax man? Will
the bank tell the tax man?
There is no tax to pay on a gift unless the giver dies within 7 years
when, as you have pointed out, there might be inheritance tax to pay.
One possibility is that you vary (legally alter) the will that your
father inherited the money from. You could get it varied so that the
family members inherit the money directly instead of being given it as
gifts. This removes the risk of it being caught again for IHT if you
father dies within 7 years. You have, I think, 2 years to do this in.
if the sum is large it might be worth looking in to.

One other legal implication of him giving away large sums is if he is
also claiming benefits or is living in council care, or if this is
about to happen. They might try to recover the money from you.

Robert
 
R

Ronald Raygun

Robert said:
There is no tax to pay on a gift unless the giver dies within 7 years
when, as you have pointed out, there might be inheritance tax to pay.
One possibility is that you vary (legally alter) the will that your
father inherited the money from.
The OP said his father had "come into" money. This doesn't necessarily
mean he inherited it, though of course he could have. He could also have
had a win on the lottery, or premium bonds, or at Ascot.

While it is true that you can vary the will in the case of an inheritance,
what equivalent action can be taken in the case of a win? Could a syndicate
be engineered retrospectively? I don't think it's possible to own premium
bonds on someone else's behalf, but the other two examples might be OK.
 
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S

Stickems.

Naive is a word that springs to mind.


| In message <[email protected]>, "tim(yet another new home)"
| >> Will
| >> the bank tell the tax man?
|
| >>
| >
| >The bank will tell the taxman.
|
| Why would they do that?
|
| > You haven't done anything that
| >the tax man needs to know about, but the bank doesn't know
| >that.
|
| But that doesnt mean they would tell the tax man about the gift. They
| will tell the taxman about any credit interest paid, but not about the
| gift.
| > You need to keep the evidence of where the money came
| >from, just in case.
|
| --
| John Boyle
 
J

John Boyle

Stickems. said:
Naive is a word that springs to mind.
For you yes. For me the word is "knowledge".

Can you answer my questions as to why the bank would advise HMR&C about
a transfer of capital?
 
T

tim\(yet another new home\)

John Boyle said:
For you yes. For me the word is "knowledge".

Can you answer my questions as to why the bank would advise HMR&C about a
transfer of capital?
I thought that banks(and lots of other people) now had to report any
credit of more than 15,000 Euro (I assumed that this was the sort of
sum involved for someone to be worried about IHT).

Perhaps taxman is not the person it is reported to, but isn't
it reported to some department of HMG.

tim
 
J

John Boyle

"tim(yet another new home)" said:
Perhaps taxman is not the person it is reported to, but isn't
it reported to some department of HMG.
Thats the point that I think Mr Stickems has missed. Banks only report
credit interest to HMR&C. Money Laundering rules require reporting too,
but not to HMR&C.
 
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M

Miss L. Toe

Ronald Raygun said:
The OP said his father had "come into" money. This doesn't necessarily
mean he inherited it, though of course he could have. He could also have
had a win on the lottery, or premium bonds, or at Ascot.

While it is true that you can vary the will in the case of an inheritance,
what equivalent action can be taken in the case of a win? Could a syndicate
be engineered retrospectively? I don't think it's possible to own premium
bonds on someone else's behalf, but the other two examples might be OK.
For the price of a deed to cover the changing of the will (probably in the
region of 200GBP) one can purchase a fair amount of life assurance that
might cover the IHT payment. (Obviously it depends on the age and health of
the insured).
 
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