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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Dear Sirs, This is a question about inheritance tax. My

Resolved Question:

Dear Sirs,

This is a question about inheritance tax.

My parents [both living] wish to gift me £10000.00. They are calling it 'a part of my inheritance'. I am concerned that it will affect both mine and their tax liability.

I understand the Annual Exemption Rule, that you can give up to £3,000 away each year, either as a single gift or as several gifts adding up to that amount - you can also use your unused allowance from the previous year but you use the current year's allowance first'

However, I am unclear if this refers to each parent or to the parents as a couple.

Many thanks,

Tim Summerhayes.
[email protected]
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

The recipient of a gift does not normally pay tax on it. Every individual has a £3,000 per annum limit for Inheritance Tax exempt gifts which exceed £250. So, your parents can each gift you £6,000 assuming they have not used their respective £3,000 exemptions for the 2012/13 tax year. It would be as well for each of your parents to write a letter to you setting out their respective gifts.

Even if the £3,000 exemption did not exist, there would be no immediate tax consequences of a gift of £10,000 being made to you. So long as the donor of a gift lives for at least seven years after making a gift, its value will not form part of their estate for Inheritance Tax purposes.

Take a look here for information on exempt gifts and here for information on who pays Inheritance Tax.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.

Many thanks, XXXXX XXXXX to confirm that the HMRC rule states 'parents' and not 'each parent'. But if that's what it means, we are good to go. Thanks again. TS.

Expert:  TonyTax replied 3 years ago.
The £3,000 exemption is for each individual person to use. The donor does not have to be the parent of the recipient. Look here and here under "Annual Exemption". Please give me the link to what you have read.
Customer: replied 3 years ago.

Tony,


Many thanks, XXXXX XXXXX total sense. The HMRC document in your link is the main source of my information. I was concerned that they did not use the term 'Individual Parent'. I am happy with your answer and the documentation you have indicated.


Have a good weekend.


 


Tim.

Expert:  TonyTax replied 3 years ago.
Thanks, XXXXX XXXXX
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