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TonyTax
TonyTax, Tax Consultant
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I have a question about gift tax. My parents, Australian Residents,

Resolved Question:

I have a question about gift tax. My parents, Australian Residents, would potentially like to gift cash (large lump sum over threshold) to me (UK resident). What are the tax implications of this? Please be explicit and detailed.
Submitted: 8 months ago.
Category: Tax
Expert:  TonyTax replied 8 months ago.
Hi. Are you and your parents UK or Australian nationals? Wiil the gift be made from assets held in Australia?
Customer: replied 8 months ago.
Australian nationals and yes, the gift will be made from assets held in Australia
Customer: replied 8 months ago.
Sorry, And I am a UK permanent resident
Expert:  TonyTax replied 8 months ago.
Thanks. Leave this with me while I draft my answer.
Customer: replied 8 months ago.
great, thanks.
Expert:  TonyTax replied 8 months ago.
The recipient of a gift, whether it is in the form of cash or assets, is not liable to tax on it in the UK. You should keep a record of the gift, maybe a letter from your parents confirming it so that if you are asked about it, you can prove where it came from. Assunming the money will be transferred to your bank in the UK electronically, you should warn it in advance of the transfer to avoid triggering the bank's anti money laundering software. Non-UK domiciled individuals are only liable to UK Inheritance Tax on UK based assets. UK based assets does not include cash held in UK banks in non-UK currency. Therefore, as the gift will be made from cash or assets held in Australia, it is beyond the reach of the UK Inheritance Tax rules. Even it was made from UK based assets, there would be no IHT until after the death of the donor and only if that death occurred in the seven years following the date of the gift. I hope this helps but let me know if you have any further questions.
Customer: replied 8 months ago.
Thanks - so just to clarify on the non-dom rules of IHT.
Once the transfer of cash has been made from Australia to my UK Bank account, the cash will be held in GBP in my bank account.
All of this is then free of any tax and/or outside the IHT rules?
Expert:  TonyTax replied 8 months ago.
That's correct as far as you not having to pay UK tax on the gift and as far as your parents are concerned in relation to IHT. Once the gift is made, the cash becomes part of your UK estate for UK IHT purposes.
Customer: replied 8 months ago.
Perfect, so the funds once transferred become part of my estate and will be subject to any IHT for my children/spouse as and when my number is ***** - though, hopefully not too soon!
Expert:  TonyTax replied 8 months ago.
That's it.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15757
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 8 months ago.
Thanks very much for your help - detailed and quick!
Expert:  TonyTax replied 8 months ago.
Thanks.

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