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 TonyTax Your Own Question

TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15759
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

I have been receiving monthly amounts from my parents (who

Resolved Question:

I have been receiving monthly amounts from my parents (who are non-UK national/domicile) as gifts for a number of years now (paid into my UK bank account). However I only recently found out that the tax authority in the EU country they are from did not consider these as gifts, but as income due it being payouts from my parents life assurance policy. The authorities in this EU country are now seeking tax returns from me on this income but I am resident in the UK and pay tax here. I've sought tax advice in the EU country in question and have been told I don't need to pay tax there but should pay tax in the UK on these gifts/income depending on the local rules here. Now my question is, what are the UK rules with regard to (foreign) gifts/payments from parents?
Submitted: 4 months ago.
Category: Tax
Expert:  TonyTax replied 4 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 4 months ago.

Recipients of gifts are not taxable on them in the UK.

Assuming that you are not the named beneficiary of the life policy, then I cannot see how you can be liable to UK tax on what would be called a "chargeable event gain" in the UK as it would not be yours for UK tax purposes. If you parents are simply making monthly withdrawals from the life policy of which they are the mutual named beneficiaries and then passing that cash to you, then you have no need to report the gifts to HMRC in the UK. However, you should keep a record of the gifts so that you can prove where the money came from if you are asked.

If you are the named beneficiary of the life policy, then you may have tax to pay in the UK on the annual gains if there are any. I would need detailed information on the life policy and the cash withdrawals to be able to have any chance of making a judgement about your UK tax position.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 months ago.
Dear *****,Thanks for you quick response.
I gathered some more information about the arrangement and I am named beneficiary (for a fixed number of years) on the monthly payouts from my dad's life annuity policy. I am afraid the policy information is not in English. Is the annual gain the total amount of monthly payouts I received per year?
Expert:  TonyTax replied 4 months ago.

Can you tell me which country this policy was issued in please.

Customer: replied 4 months ago.
It was issued in the Netherlands.
Expert:  TonyTax replied 4 months ago.

With a UK policy or even an offshore one issued by a UK insurance company, there is only a taxable gain if the cash withdrawals in a policy year exceed 5% of the original investment. Any part of the 5% allowance not used in one year can be used in a later year. Therefore, if 5% of the original investment was withdrawn every year for 20 years, there will have been no taxable chargeable event gains. All the original investment will have been withdrawn and any subsequent withdrawals will be pure profit and will give rise to a chargeable event gain. Take a look at HS320 and HS321.

You may need to refer back to the Netherlands advisor to find out how the type of policy you are a beneficiary of works and how any income or gain is calculated. Normally, if income or a gain is taxable on the host country it will be taxable in a other country but it won't always be calculated in the same way.

Customer: replied 4 months ago.
Many thanks for your advice!
Expert:  TonyTax replied 4 months ago.

When you know the nature of the payments you have been receiving, it will be easier to decide whether there is tax to be paid in the UK.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15759
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions