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bigduckontax, Accountant
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Can I be taxed on a settlement from my ex partner? We were

Resolved Question:

Can I be taxed on a settlement from my ex partner? We were never married but he wants to give me a financial settlement before he goes to live overseas.
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

This is a gift. the UK does not have a gifts tax regime so no tax is due on what he gives you. Just thank your lucky stars you do not live in France where gifts tax kicks in at 5K Euros!

There is but one thing to bear in mind. The gift creates a Potentially Exempt Transfer (PET) in the donor's Inheritance Tax (IHT) affairs. PETs run off at a taper over seven years and in the event of a decease within this period are added back to the estate for IHT purposes. PETs are the first to suffer IHT and in the event of the estate being insufficient to meet the tax on the PET then the liability cascades down to the beneficiary for immediate payment. The classic defence against a PET is a short term reducing ba***** *****fe insurance. IHT does not start until assets on death exceed 325K.

I do hope that my reply has set your mind at rest on this matter.

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Expert:  bigduckontax replied 9 months ago.

Thank you for your support.

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