How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3813
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Hi We are a married couple living in the UK with 3 children

Resolved Question:

Hi

We are a married couple living in the UK with 3 children who are self employed running a small partnership business which is located in France. We pay tax in France on our income and through an accountant in the UK pay tax/nic each year.

My wife has been diagnosed with an incurable cancer and we are currently undergoing treatment within the NHS. It is a rare cancer that within the NHS has no set prognosis at this stage.

We are looking at the possibility of my wife receiving treatment in either Europe or the United States which will need to be paid for. To do this we need to raise money with an initial target of £100,000,

We are unable to set up a charity so all money will be given towards the cause by means of funding or donation.

How would receipt of the money be treated from an HMRC tax point of view? it will all be used to pay for treatments and travel relative to my wifes treatment.

i look forward to hearing from you

regards

Mark
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

It's good news, with a caveat.

Donations received are not subject to UK tax. However, as far as the donor is concerned they may create a potentially exempt transfer for Inheritance Tax (IT) purposes if the donor dies within 7 years of the gift. This means that the gift is added back into the estate for IT purposes, but there is a taper which reduces this over time. The danger here is that if the estate has insufficient funds to pay the IT then the tax on the gift falls to your wife.

HMRC guidance is:

'The seven-year rule - 'potentially exempt transfers'

Any gifts you make to individuals will be exempt from Inheritance Tax as long as you live for seven years after making the gift. These sorts of gifts are known as 'Potentially Exempt Transfers' (PETs).

However if you give an asset away at any time, but keep an interest in it - for example you give your house away but continue to live in it rent-free - this gift will not be a potentially exempt transfer.

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, if you die within seven years of making a gift and the gift is valued at more than the Inheritance Tax threshold, Inheritance Tax will need to be paid on its value, either by the person receiving the gift or by the representatives of the estate.

If you die between three and seven years after making a gift, and the total value of gifts that you made is over the threshold, any Inheritance Tax due on the gift is reduced on a sliding scale. This is known as 'Taper Relief'.'

There are complex rules as to the amounts involved for donors.

One thing does concern me however. Is this cancer treatment not available in France under their equivalent of the NHS? I have a friend resident in the South of France whose kidney transplant is so covered depending on the availability of a suitable organ.
Customer: replied 3 years ago.

Many thanks for this . It seems we would be ok from a tax liability point of view (ie non payable on cash gifts towards the cause) in general but must be aware of any large gifts and potential inheritance tax complications from that Donor. Is that right?


 


Thank you for your concern. It is more about getting the right treatment now and finding it! The US and some of Europe particularly Germany seem to have advancements in Treatments that are not available in the UK under the NHS or otherwise. In our searching so far nothing has cropped up in France that is not available to us in the UK at present.


 


From personal experience we know medical care in France can be


excellent but nothing has shone out so far in terms of treatment there we cant get here.


 


If we were to go to Germany there may be some sort of coverage under the Eurpoean union but we need to investigate that further, particularly if that is the route we go.


 


Thank you for your help


 


regards


 


mark

Expert:  bigduckontax replied 3 years ago.
Yes, you've got it. There is a possible liability on the donor for 7 years which could escalate to your wife if the deceased's estate is insufficient.

Very sorry to hear of your wife's unfortunate predicament. Itis a worrying time for the pair of you.
bigduckontax and 2 other Tax Specialists are ready to help you

Related Tax Questions