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Thomas
Thomas, Solicitor
Category: Family Law
Satisfied Customers: 7602
Experience:  UK solicitor
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Can I gift my nephew a sum of money to be part of a deposit

Resolved Question:

Can I gift my nephew a sum of money to be part of a deposit on a flat he is proposing to buy? What are the tax implications for me and/or him?
Submitted: 3 years ago.
Category: Family Law
Expert:  Thomas replied 3 years ago.
Hi,

Thanks for your question.

Would this be a pure gift (ie. not a loan) whereby you would not receive anything in return for the gift?

Kind regards

Tom
Customer: replied 3 years ago.


Yes, a pure gift

Expert:  Thomas replied 3 years ago.

Hi

Thank you for your question and patience, I’m Tom and I’ll try to help you.

The gift is not earned income, so there would be no income tax implications for your nephew.

If the gift is a pure gift without any reservation of benefit in your favour (eg. by you living at the property) then the transfer of monies will be a “potentially exempt transfer” for the purpose of inheritance tax.

This means that if you survives 7 years from the date of the gift then no part of the value of the gift will be included in your estate for IHT purpose.

If you die within 3 years of the gift then the whole of the value of the gift would be included in your estate for IHT.

If you die between 3-7 years then only a percentage of the gift will be included in your estate for IHT as follows:-
3 to 4 - 80%
4 to 5 - 60%
5 to 6 - 40%
6 to 7 - 20%


My goal is to provide you with a good service. If you feel you have received anything less, please reply back as I am happy to address follow-up issues specifically relating to your question.


Kind regards,


Tom
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