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 Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13947
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

My retired parents are considered making a gift of £50k to

Resolved Question:

My retired parents are considered making a gift of £50k to me. I am working 30 hrs per week. I understand that their may be inheritance tax on my parents estate if they died within 7 years of the gift (from 3 yrs there is a sliding scale).
Please could you tell if I will incur any tax implications, i.e. capital gains tax?
thank you
Niki
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi
Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
There is NO tax impli9cation on you at all for receiving this gift, the only element that HMRC are interested in, is on any income that might arise from this lump , should you invest it. (such as interest or dividends, or a house purchase that generates rental income etc)
So the actual receiving on this lump sum, you can take without any further consideration for tax (either income tax or capital gains tax)
And you already have a full understanding of the Inheritance tax position, and how this might affect your parents.
Only one further bit of information, if you are in receipt of any tax credits, or benefits ,this could affect your current entitlement, if you retain the money, and it does generate income - as the tax credit office and housing benefits/council tax claim will need to take into account an amount to represent the "interest" that might arise from the bank/building society, so do let any interested parties know of this lump sum.
Let me know if you have any follow up questions.
Thanks
Sam
Customer: replied 3 years ago.

Hi Sue

Thank you for your helpful and prompt response.

I am considering spending some on my house (repairs and maintenance) and perhaps a newer car, and invest the remainder in ISAs (instant and share) and possibly some bonds. I assume the ISAs part will be tax free but, any other income received from investments will need to be reported to HMRC for tax purposes?

Do I need to inform HMRC when I receive the gift?

I do not receive any benefits but, I do get a reduction on my council tax due to single occupancy - would this lump sum affect this discount?

Expert:  Sam replied 3 years ago.
Hi
Thanks for your response
No you do not have to inform HMRC of this amount, but make sure your parents provide you with details of the gift (date and the amount etc) just in case they do ask after it. (which is unlikely, but at least you have documents to back up the amount received)
Yes, ISAs are tax free - as long as you fulfil the remit (UK resident, and within the amounts permitted to invest)
And yes, any other investments that do not fall into the remit of ISAs, that generate income, will have to be informed to HMRC - but if you are a basic rate taxpayer (which you suggest according to your earnings) then basic rate tax is deducted at source, and unless your income breaches the 40% mark, will there need to be investment income reported to HMRC - the limit for this is £41865 a year currently.
The single occupancy on council tax, has no income bearing considerations, this is due to the fact you are the sole adult in the property, so you need not alert the council either.
Let me know if you have any follow up questions, but, if in the meantime you would be kind enough to rate the level of service I have provided, it would be appreciated, as this ensures I am credited for my time.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Hi Sam


Thank you


Have done your rating


regards


Niki

Expert:  Sam replied 3 years ago.
Hi Niki

Thank you so much - this is appreciated.


Thanks

Sam