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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am 79 and I have 7 grandchildren. When each was born I started

Customer Question

I am 79 and I have 7 grandchildren. When each was born I started from income saving £20 initially, then £25 a month into a Unit Trust (now ICVC) in my name, but labelled with child's initials. The intention was to build up a sum of money to give each grandchild on their 18th birthday. Three of these have been paid - between £10k and £11k - two of them in USA. Four have yet to be paid. I have kept the parents fully informed throughout. Please confirm that these transfers qualify as 'gifts out of income' and how do I record them on my annual self-assessment?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

You may make gifts of up to 3K per annum outside the Capital Gains Tax (CGT) envelope. If you go over this limit the excess becomes a Potentially Exempt Transfer (PET). PETs run off over 5 years to zero. Even if you go above the 3K I thunk you will agree that a PET kicking in is unlikely. Your gifts at 25 x 12 x 7 = 2100 are below the annual allowance so there are no CGT implications.

The income from those trusts until you pass them to the children are your income, but as you have designated them with the children's initials it becomes their income.

They do not require reporting, but you are advised to retain records to cover yourself in the unlikley event of some future enquiry.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your excellent support.

There is an error in my answer though. PETs run off over 7 years, not 5, sorry!
Customer: replied 3 years ago.
Many thanks for the correction. I have just submitted my annual self-assessment return and did not mention the gifts. Incidentally the return assessed an overpayment of over £2500.
Expert:  bigduckontax replied 3 years ago.
Pleased to be of assistance.

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