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A friend living abroad wants to gift me some money, will I

Resolved Question:

A friend living abroad wants to gift me some money, will I have to pay tax on it? The amount is around £11,000.00 UKP and he has agreed to help me out as and when needed in the future also.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.
Hi.

The recipients of gifts in the UK do not have to pay tax on them, whether they are one offs or regular payments. You should ask your friend to write you a letter each time that they are making a gift to you so that you have proof of the provenance of the money if you are asked by the tax office or your bank.

You might also warn your bank in advance of any direct electronic payments into your account of any size as you would not want to trigger their money laundering procedures as this would probably delay access to the money.

If your friend is UK domiciled, the gifts will be potentially exempt transfers for Inheritance Tax purposes. Take a look here for information on who pays Inheritance Tax in different circumstances.

I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.

Thanks Tony, he is not UK domiciled he is from the UAE.


 


So as long as he writes a letter each time, he can make as many regular or irregular payments into my bank per year for any amounts (as suits him) and it's tax free? And I don't have to declare it with the HMRC?

Expert:  Tony Tax replied 1 year ago.
That's correct. Clearly, there should be no employer/employee relationship between the two of you as that would probably invalidate the payments as gifts.

Even though your friend is non-UK domiciled, his estate will still be liable to UK IHT on his UK based assets excluding foreign currency accounts in UK banks. It would, therefore, be preferable if the gifts could be made from non-UK sources or from foreign currency accounts held in the UK.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14311
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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