What are the tax implications of giving a relative money?

[DaveW]

My sister lives in Australia and is trying to buy a house. I would like to help her out by giving her £30K but have no idea what the tax (or other) implications are of doing so. Can I just give her the money?

[farmroad38]

I think you can, so long as you don't die in the next seven years. Sounds a bit morbid, but if you were to die, then the gift you have given her counts as part of your estate and will be subject to inheritance tax (subject to your estate being above the tax threshold).

Edit: All explained (in a rather long-winded fashion) here: http://www.hmrc.gov.uk/CTO/customerguide/page6.htm

[BigH]

I think you can, so long as you don't die in the next seven years. Sounds a bit morbid, but if you were to die, then the gift you have given her counts as part of your estate and will be subject to inheritance tax (subject to your estate being above the tax threshold).

Edit: All explained (in a rather long-winded fashion) here: http://www.hmrc.gov.uk/CTO/customerguide/page6.htm

yes - what he said

also, you are allowed to give away £ 3000 with no tax implications (plus £ 3000 from previous year if not used), so estate would only be taxed on £ 24,000 - and this amount is reduced on a sliding scale as every year passes

also, if your earnings are such that this £ 30,000 is made from disposable income, and doesn't impinge on your capital, then no tax implications at all

[DaveW]

also, if your earnings are such that this £ 30,000 is made from disposable income, and doesn't impinge on your capital, then no tax implications at all

Excuse my ignorance but what the devil does that mean?

[farmroad38]

Excuse my ignorance but what the devil does that mean?

As I understand it, rather than paying her £30K from savings, if you were to pay her say, £5000 a month from your salary, there'd be no tax implications. You'd also be earning a bleeding fortune... :nuts:

[cjanderson]

My sister lives in Australia and is trying to buy a house. I would like to help her out by giving her £30K but have no idea what the tax (or other) implications are of doing so. Can I just give her the money?

yep, give her the money and make a note of it in your will. Worse that can happen is she gets taxed on it, but its still 30k @60% that she gets. And i assume you have other assets bar this 30k which can pay the IHT anyway.

and the "doesn't damage your lifestyle" means you can give away any amount you want as long as its not material to you, bit hard to quantify but parents who are retired and have large house, no mortgtage and say an endownment matured, they could give that away as no affect on their life really.

you are a nice brother. I'd go shares with my sister on a place, not sure i'd just give her the money. Too much potential for "hassle" and arguments if its not done fairly business like (ie you have some legal share in wherever she buys, or if they sell within x years you get the deposit back). But then my sister isn't you one :D