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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15976
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My father recently passed away. My mother now

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My father recently passed away.
My mother now wants to give me a 1 time cash gift of £40k to help towards a house purchase.
Can you talk me through the tax implication here. Is it tax exempt for me? If so, do I still have to declare it in my self assessment?
The last question - does it matter if that gift comes in two chunks, say £10k and then £30k?

Recipients of gifts don't pay tax on them in the UK nor do they need to be reported to HMRC in a self-assessment tax return. It doesn't matter whether you receive it in one or more instalments. However, it would make sense to have your mother write you a letter confriming that she is making a gift to you so that you have proof of the prevenance of the money. You might also inform your bank in advance of such a large deposit or transfer to avoid triggering their money laundering software.

As far as your mother is concerned, she will be making a potentially exempt transfer of £40,000 to you. So long as she lives for seven years after making the gift, its value will not be included in her estate for Inheritance Tax purposes. Otherwise, it will.

Take a look here for information on Inheritance Tax, here for information on the transfer of an unused IHT nil-rate band and here for information on who pays IHT in different circumstances.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.

Perfect, thank you.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Hello again

Another question - not sure if my payment has covered it but here goes.

I own a buy-to-let.

Current value - £230k

Original purchase price - £89.5k

Mortgage remaining - £150k

What would be the profit on the property after I have sold and what is my Capital Gains liability on that profit?


Leave this with me for a bit.

Hi again.

If you sell your buy to let for £230,000 having paid £89,500 for it, you will make a gain of £140,500. You can also deduct the costs of buying and selling the property (stamp duty, legal fees, survey fees, selling agent fees etc).

There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the sum of your income and the net taxable gain in the tax year you sell the property. The first £11,100 of gains made in the 2015/16 tax year will be tax free. Assuming you sell the property in the 2015/16 tax year, one of the following scenarios will apply:

1 If the sum of your income and the net taxable gain in 2015/16 is £42,385 or less, you will pay CGT at 18% on the net taxable gain.

2 If your income alone in 2015/16 is £42,385 or more, you will pay CGT at 28% on the net taxable gain.

3 If your income alone in 2015/16 is less than £42,385 and the addition of the net taxable gain takes it over £42,385, then you will pay CGT at 18% on some of the gain and at 28% on the balance.

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