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bigduckontax
bigduckontax, Accountant
Category: Tax
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My partner and I (not married nor in civil partnership) own

Customer Question

My partner and I (not married nor in civil partnership) own a house & have 2 children. I would like to 'give' her a lump sum (75K) share of the proceeds of the sale of some shares (on which i have already paid CGT).
Is there a tax liability on that 75K, and what prevents me from just transferring that sum to her account from mine?
Thanks
Stuart
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Stuart, I'm Keith and happy to help you with your question.
Nothing at all, gifts are outside the scope of UK taxation. Thank your lucky stars you don't live in France where gift taxes kick in at some 5K Euros!
There is one point to note, however. The gift would create a Potentially Exempt Transfer (PET) in your Inheritance tax (IHT) affairs. PETs run off at a taper over seven years and in the event of your demise will be added back into your IHT computation. PETs are the first to suffer IHT and if your estate is insufficient to meet the tax then the liability cascades down to the beneficiary for immediate payment.
There are two solutions to prevent this, one normal and one flippant. The normal method is to take a decreasing term life insurance cover to protect the PET. The flippant one is to get married before the gift in which situation no PET would be created at all, inter spousal etc transfers being outside the scope of UK taxation.
I do hope I have been able to shed some light on your proposals and not been too cheeky into the bargain.
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Customer: replied 2 years ago.

Hi Keith

Thank you. Made me laugh and relax in equal measure. I'm aware of the IHT issues, but wanted to be sure i was not generating any income tax liability for my partner. If i understand you correctly, it's fine. I am glad to live here & not in France.

I am rating you as requested - very well of course.

Best wishes

Stuart

Expert:  bigduckontax replied 2 years ago.
Delighted to have been of assistance, Stuart.
There are no Income Tax complications here. Let us just hope that she does not skedaddle with the cash on receipt! Kerchingggg!
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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