# Finance



## cabby (May 14, 2005)

Can one Gift the £3,000 annual allowance to a child(over 21) every year, do we have to notify anyone that this has been done or a form to fill in.

cabby


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## GEMMY (Jun 19, 2006)

I would think so, bank records should suffice.


tony


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## cabby (May 14, 2005)

Any further conformation please.

cabby


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## rayc (Jun 3, 2008)

It is quite complicated as it is all part of Inheritance Tax and I suspect that is where the answer to your question lies. I thought that if the lump sum came out of income that has been taxed then there is no further tax implication.
http://www.saga.co.uk/magazine/money/personal-finance/giving/tax-and-gifting-money-to-children


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## icer (Dec 11, 2006)

You can make a gift of £3000 out of your annual allowance and you can use last years allowance as well ie £3k more.
Thereafter you can carry on every year if you want @ £3k or less
If you have a gap and restart you can still use the previous years allowance if you start again.
It is possible to gift £5000 to a child as a wedding gift or £2500 to grandchild as wedding gift 
It makes sense to leave a record for whoever deals with your estate in case the inland revenue want to delve further as it will make it easier to answer questions.

As far as I am aware the recipient does not have to declare the monies or pay tax on them as they are a gift and not earned income.

What I think complicates things is the ability to Gifts paid for out of surplus income.
They are exempt provided the tranferors established standard of living is not reduced by the gifts. that the gifts came out of income and not capital and there is an established pattern of giving. I believe that this means that you cannot use interest as income.

Ian


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## peribro (Sep 6, 2009)

rayc said:


> I thought that if the lump sum came out of income that has been taxed then there is no further tax implication.


Regrettably not so in the UK where it is possible to pay 45% tax on your earnings and then a further 40% on what is left when you die - plus some national insurance along the way in all probability.


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## autostratus (May 9, 2005)

This is quite interesting too.

https://www.savvywoman.co.uk/1570/giving-away-your-money-while-youre-alive-understanding-the-rules/


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## rayc (Jun 3, 2008)

peribro said:


> Regrettably not so in the UK where it is possible to pay 45% tax on your earnings and then a further 40% on what is left when you die - plus some national insurance along the way in all probability.


The SAGA link I posted says "If you're still working and paying out of income, you needn't worry. You've already paid tax on your income, so regular payments out of this to your children won't be subject to additional tax. As far as the taxman is concerned, spend the money as you like as you've already paid your liability"
This is what I was alluding to.


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## nicholsong (May 26, 2009)

rayc said:


> It is quite complicated as it is all part of Inheritance Tax and I suspect that is where the answer to your question lies. I thought that if the lump sum came out of income that has been taxed then there is no further tax implication.
> http://www.saga.co.uk/magazine/money/personal-finance/giving/tax-and-gifting-money-to-children


Ray

I think the link in post No. 7 below explains the gifts out of income better than the Saga link in your post; it has to be excess income, which does not reduce one's own standard of living.

Geoff


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## cabby (May 14, 2005)

The post No.7 is very good, you are right Geoff, there are links to travel insurance that I never knew about, for those with medical conditions and over 75 as well.
Have signed up with them for updates.

Thanks Autostratus.

cabby


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## autostratus (May 9, 2005)

cabby said:


> The post No.7 is very good, you are right Geoff, there are links to travel insurance that I never knew about, for those with medical conditions and over 75 as well.
> Have signed up with them for updates.
> 
> Thanks Autostratus.
> ...


You're welcome.

Funnily enough I've been looking things up myself today as I want to pay my grandaughter a regular amount into a Help to Buy ISA.
The payment out of income (taxed pension) rather than my savings is very relevant as I don't want her to have to pay inheritance tax when I pop off. It can't be that long now:frown2:

(PS I've stopped buying green bananas!)


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## icer (Dec 11, 2006)

If you die within 7 years the PETS do not reduce the estates liability to tax at 40%

http://www.which.co.uk/money/tax/gu.../inheritance-tax-planning-and-tax-free-gifts/

Ian


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## bognormike (May 10, 2005)

rayc said:


> The SAGA link I posted says "If you're still working and paying out of income, you needn't worry. You've already paid tax on your income, so regular payments out of this to your children won't be subject to additional tax. As far as the taxman is concerned, spend the money as you like as you've already paid your liability"
> This is what I was alluding to.


quite well explained, and as alluded to elsewhere, the best way of explaining this is to say that as long as you don't reduce your capital there's nothing the tax people can do about ANY payments to anybody who might inherit your capital later. Or even non-beneficiaries such as payments to the local pub, Tescos, Ladies (or gentlemen) of the night, persons who deal in illegal substances and so on. BUT amongst all that frittering, if you do eat in to your capital you should make some record of payments to family members to get relief:smile2:


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