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I am a UK national resident in UK. Can a non UK citizen (not…

I am a UK national...
I am a UK national resident in UK. Can a non UK citizen (not related to me) give me a gift under the UK seven year PET to me.
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Answered in 14 minutes by:
7/8/2012
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,231
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi

 

Thanks for your question

 

The giver of this gift will not be bound by UK Inheritance tax laws, (and PET and the 7 year rule is a UK Inheritance tax law) so you will need to establish what the position is with gifts in the country from which the giver is from.

 

Can you advise which country this is, and I will see if I am able to help (as I am sure you can appreciate we are UK tax experts on the UK tax forum with Just Answer)

 

Thanks

 

Sam

 

 

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Customer reply replied 5 years ago
Hi. Thanks for your reply. My friend is a Nigerian and resident there.
We are friends for the last 35 years. His wife passed away last year

and his gifting to his sons in UK and friends like me. I want to do the right thing and pay uk tax if that is the only solution

Hi

 

Thanks for your response

 

I will ask this (and I do apologise if I am wrong but have seen this happen on too many occasions)

 

Are you sure this is not a scam - where you are advised that you will benefit from inherited money (either directly or from a third party), and before its released you are asked to pay money up front (COT bank transfer code and processing fees) and you never get to see the money.

 

If this is a genuine gift, then the Nigerian laws are as follows

 

The lifetime gift tax exemption is $5,000,000 ($10 million joint) in 2012. Gift tax rates fall at the same rates as estate tax rates but continue (at 35% or the top income tax rate) after the estate tax repeal.

Gifts (apart from the annual exclusion of $13,000 per donee in 2012 (same as 2011) are applied against the $5,000,000 exemption so that gift tax is due when their total exceeds $5,000,000. If estate tax is still in existence when the donor dies, the estate will include prior taxed gifts and prior untaxed gifts counted against the $5,000,000 exemption. If an estate tax results (because the estate at death plus these prior gifts exceeds the estate tax exclusion amount applicable in the year of death), that tax is reduced by prior gift tax payments.

Some states impose gift taxes, so you will need to ask more from the individual making the gift.

But as you can see there is no PET rules in Nigeria, if the gifts during the lifetime exceed the limit, then gift tax becomes due at the gifters death.

 

Thanks


Sam

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Customer reply replied 5 years ago
Thanks for your response. I am very sure it is NOT a SCAM. We are
very good friends form 1979 and known each others family very well.


From UK tax point, will I qualify for PETS. Do I need to inform HMRC

when I receive it and also inform them if he passes away with in 7 years.


Thanks Ali

Hi

 

Thanks for your response and I am glad that its a genuine gift.

 

You do not need to do anything and do not need to inform HMRC, just keep the evidence of the gift (any documents discussing it, and details of the date the gift was made. You just will be liable to tax on any income that this lump sum produces (such as interest or investment income)

 

Also you do not need to advise HMRC when your friend passes away as this has NO bearing on the UK Inheritance tax regime, this is Nigerian tax authorities that will monitor the gift made, and what impact this has on your friends estate when he passes away.

 

So I reiterate that PETS are to do with UK Inheritance tax (when the person who has passed away is a UK citizen and has an estate to be considered) and gifts made.

This is not a UK resident and therefore no consideration is made, before, during or after the gift has been made. So PETS or GWR - (Gift with reservation) do not come into play at all.

And this does not affect you, as you are the receipiant from a non UK gift.

 

Thanks


Sam

 

 

Sam
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