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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Gift

Resolved Question:

Hello I am Freelance Buddhist Monk and registered in the UK as  sole trader. A donation was given to a community account in Australia a year ago. I have decided to disrobe and come back to England. The person that gave the donation would like to gift me the money to support me. In Australia there is no money on Gifts.

In the UK when I get a donation I normally pay tax on that. I wondering if there is away legal way to make this gift - tax free it will be close 40UK pound. Otheriwse I was going to ask to split the donation over this tax year and the next. And find a way to legitimately use my tax allowance to reduce the tax bill

Thanks

amaranatho

Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site.

Thank you requesting I help you with your question.

If you are in receipt of a gift that is unconditional (i.e. you are not expected to give something in return for that money), then as a recipient of that gift you receive it free of tax in your hands. There is no tax on gifts in the UK.

As far as the person giving the gift is concerned, in UK Tax is would be regarded as a potentially exempt transfer for inheritance tax purposes. If the person making the gift is a Foreign National living in a foreign country then IHT implication would not be applicable .

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Thank you is there some way I can absolutely make sure that I will not get taxed. The reason is that if I transfer the money know and later they say I need to pay tax, I will be have to pay tax on around roughly 30K - and I will have to now way to use my tax allowance.

Thanks

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

You should get a statutory declaration prepared and signed by the person gifting you the money in which it is stated unequivocally that the monies being gifted are unconditional and no favours are expected in return for the gift.

This would help you in the event there were to be an enquiry from HMRC. Furthermore, this being a significant amount, you should alert your bank of the sum to cover you with money laundering regulations.

I hope this is helpful.
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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.
Customer: replied 2 years ago.

I very much appreciate your answers yesterday and I'm left with a bit of doubt.

The money will be coming from a Community account - which is a not-for-profit account, not from a individual. As the money was given to the community account, I have asked the donor, if they are happy to agree to give the money to me, which they are and they are going to get a legal letter done.

So does the following still apply.

"As far as the person giving the gift is concerned, in UK Tax is would be regarded as a potentially exempt transfer for inheritance tax purposes. If the person making the gift is a Foreign National living in a foreign country then IHT implication would not be applicable."

What I take from this is that because the gift has come from abroad there IHT cannot be applied to it.

It such a large sum for me, I don't want to get taxed on it, or be aware of IHT issues.

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

What I stated yesterday still stands good.

A gift from a foreign country and to whom UK IHT does not apply, you will not be taxed on it. A gift is tax free.

I hope this is helpful.
Customer: replied 2 years ago.

Thanks very much for your help. I very much appreciate that


 

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