UK Tax Questions? Ask a UK Tax Advisor for answers ASAP
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How much do you intent to give?How often do you want to give?Where is the recipient - UK resident?Whats the use of the funds to the recipient?There is no need for a lawyer or a professional. A simple letter or gift deed is enough. However i will provide full details once you have answered the above questions.Thanks
Here are 5 scenarios:1. Brother - in UK, one-off payments eg to buy a car or repair house, 1-2k payments at irregular times depending on when the need arises2. Brother - in UK, £100 a month for saving (for any emergency, future needs, or starting business in future)3. Sister in law - in UK, 5k for investing loaned for 2 years interest free4. Mom - in UK, one-off payment of 5k for trading/investing, might payback 3-5 years5. Elderly Aunty - in East Africa, living expenses, £300 every 2-3 months
Thanks for the reply and thanks for your patience as i was away.Firstly you need to draft a gift deed for all these gifts- you can read more about this on HERE. Any gifts you make to individuals will be exempt from Inheritance Tax as long as you live for seven years after making the gift. If you die within seven years and the total value of gifts you made is less than the Inheritance Tax threshold, then the value of the gifts is added to your estate and any tax due is paid out of the estate. However the gift deed will ensure that some gifts as ones below are not included in your inheritance even if you die within 7 years. The deed is not a requirement but documents and leaves an audit trail in case of HMRC enquiry.1.You can make small gifts up to the value of £250 to as many individuals as you like in any one tax year. However, you can't give more than £250 and claim that the first £250 is a small gift. If you give an amount greater than £250 the exemption is lost altogether.2.Regular gifts or payments that are part of your normal expenditure - say you earn £4k per month and you £100 a month to brother, £300 to aunt etc these are allowed as long as you document all that and can prove that your income supports that.
So in conclusion you can make all these gifts, but have enough audit trail - particularly a gift deed. There are no tax implications for you and your receipients unless you die within 7 years.
Hope this helps.
Thank you for your prompt and concise response. Excellent service!