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Tax On The 'bank Of Mum And Dad'?

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The only people buying houses nowadays - that they are actually going to live in themselves - have been given substantial deposits by their parents. (Someone here may know the stats - I think it's 2/3rds of FTBs).

But... if a parent gifts a child their deposit of many thousands of pounds, shouldn't that child pay capital gains on it?

If not why not? Do the HMRC just turn a blind eye?

And, if the CGT rules were enforced properly, what would happen...? :rolleyes:

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https://www.moneyadviceservice.org.uk/en/articles/gifts-and-transfers-exempt-from-inheritance-tax

"

Cash gifts

There are some gifts you can make to family or friends (or indeedanyone who isn’t your spouse or civil partner) which reduce the value of your estate. But there are strict limits:

  • a maximum of £250 per year to any one person
  • a maximum of £3,000 in total gifts per year
  • a wedding gift of up to £5,000 for your child and their partner
  • a wedding gift of up to £2,500 for your grandchild and their partner
  • a wedding gift of up to £1,000 for anyone else"
"Potentially taxable gifts

You can, of course, make any other gifts to individuals that you want to. It’s your money, after all. But these gifts will still count as part of your estate for seven years after you transfer them to someone elseand could be subject to Inheritance Tax if you die in that period.

You also need to be comfortable that you can afford to give the gift away because once it’s given away, you cannot continue to benefit from it. This is particularly relevant if you are thinking of giving your house away. There can be tax consequences if you give it away but continue living there.

The technical name for these gifts is Potentially Exempt Transfers (PETs). They include situations like:

  • you give your grandchild £10,000
  • you transfer some shares to your sibling
  • you buy a flat for your child

If you die within seven years of making these gifts they’ll still count as part of your estate for Inheritance Tax purposes.

If you put investments, cash or property into a trust, you may be charged Inheritance Tax at a rate of 20% if the value of the gift (added to the value of any gifts made into trust in the previous seven years – your “cumulative total”) exceeds the nil-rate band (currently £325,000).

"

Ypou can't even give away your money without being taxed on it :lol:

F**king criminals.

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I thought you were opposed to the payment of tax?

" towards this unfair tax."

Every tax is unfair.

#doublestandards

Edited by 25 year mortgage 8itch

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Cash gifts

There are some gifts you can make to family or friends (or indeedanyone who isn’t your spouse or civil partner) which reduce the value of your estate. But there are strict limits:

  • a maximum of £250 per year to any one person

Oops. I could fall foul of this as my girlfriend (live in) pays an amount to me per month as I pay all the bills and buy all the food. Guess just asking her to pay it straight to my Mastercard would circumvent it as it doesn't increase the value of my estate?

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Oops. I could fall foul of this as my girlfriend (live in) pays an amount to me per month as I pay all the bills and buy all the food. Guess just asking her to pay it straight to my Mastercard would circumvent it as it doesn't increase the value of my estate?

Ludicrous, isn't it.

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I looked into this recently. You can give anyone as much as you like, provided they are not an employee, and there is no tax to pay unless you die within 7 years of making the gift. In that instance if your estate (including any money you gave away above the allowance) exceeds the inheritance threshold, then the estate will be taxed accordingly. However it is worth noting that this retrospective tax is a sliding scale so if it was 6 years since the money was given away the rate is very low (less than 10% I think).

Of course if Corbyn came into power every penny you have will go into renationalising the railways and your children will be sold to ISIS to pay for housing for all the refugees that Labour will want to move here.

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Oops. I could fall foul of this as my girlfriend (live in) pays an amount to me per month as I pay all the bills and buy all the food. Guess just asking her to pay it straight to my Mastercard would circumvent it as it doesn't increase the value of my estate?

No tax in this situation so fill yer boots.

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Of course if Corbyn came into power every penny you have will go into renationalising the railways and your children will be sold to ISIS to pay for housing for all the refugees that Labour will want to move here. the banks

Corrected for accuracy

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If you put your money in bitcoin you can give it anyone you like, and there is absolutely nothing the state can do. They can't tax it if they don't know who owns it.

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£50 taken out at the cashpoint every other day. There are plenty of cashpoints around. There are also lots of thieves around and plenty of ways to lose, destroy or misplace cash.

Very easily done. Like in a boating accident.

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Oops. I could fall foul of this as my girlfriend (live in) pays an amount to me per month as I pay all the bills and buy all the food. Guess just asking her to pay it straight to my Mastercard would circumvent it as it doesn't increase the value of my estate?

If she pays you this from her income you don't have to pay tax.

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Unless she's paying you for, er, "services" - in which case it's income.

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Oops. I could fall foul of this as my girlfriend (live in) pays an amount to me per month as I pay all the bills and buy all the food. Guess just asking her to pay it straight to my Mastercard would circumvent it as it doesn't increase the value of my estate?

It's not a gift, it's to pay bills so it does not count. Think of how many parents pay their children bills past the age of 18, that would normally come out of taxed income rather than capital so irrelevant.

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It's not a gift, it's to pay bills so it does not count. Think of how many parents pay their children bills past the age of 18, that would normally come out of taxed income rather than capital so irrelevant.

Ah OK. Never know with the Gov :P

Unless she's paying you for, er, "services" - in which case it's income.

Be nice if I could charge for that... I'd get a couple of them and go part time :)

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