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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5115
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My brother has just sold his house and moved in with us giving

Customer Question

My brother has just sold his house and moved in with us giving us the proceeds to cover him for his remaining years, is there any tax liability?
Submitted: 2 years ago.
Category: Tax
Expert: replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Please clarify for me ..
I presume you are referring to money gifted by your brother.
Is this money to cover contributions towards his living expenses or is it in the form of rental income you would get otherwise.

If he were not to make this payment, could he have stayed with you or is this payment conditional?

Many thanks

Customer: replied 2 years ago.

The money is to pay off an interest only mortgage, we had planned on downsizing but didn't want him in a home as he can no longer manage himself.

Expert: replied 2 years ago.
Kath, thank you for your reply.

Basically, your brother is gifting you the funds to help you with paying off a mortgage and enable you to ensure he is looked after at home rather than spending his life in a home. I don't see you receiving these funds to constitute income that should give rise to tax.

Gifts in the hands of the recipients are received free of tax in the UK.

Having said that, these funds would be regarded as potentially exempt transfer for your brother's inheritance tax purposes. The seven year rule applies to this gift meaning gifts you make during your lifetime which don’t immediately fall into the tax-free list may become tax-free, providing you survive for seven years after making the gift.

Provided his estate was worth less than the threshold for IHT (currently £325,000) including gifts made in the seven year period prior to death, there would be no IHT payable on the gift.

More information on gifts for IHT purposes can be found here

I hope this is helpful and answers your question.

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