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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a UK national living in the UK married to a French national,

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I am a UK national living in the UK married to a French national, who has dual nationality. We have lived full time in the UK since the late 1970s and worked full time there paying standard rate tax. We are now both retired from our jobs. My wife has an French auntie who is 104 years old living in France who wishes to make us a gift of around 60000 euros which we will distribute to our three children who live in the UK. What are the tax implications of this? Would we be liable for CGT? The current legislation in France is that if we accept this gift into our French bank account we would be liable for 60% tax. Are there any advantages to transferring the money directly to our British account? Thanks.

There is no Capital Gains Tax charge on cash gifts in the UK nor does the recipient of a gift normally pay tax on it in the UK. Assuming the gift from your wife's aunt is made from assets or cash held outside the UK, then there can be no Inheritance Tax charge on the aunt's estate should she die within seven years of making the gift.

I cannot tell you what the French tax position would be if the transfer was made direct to the UK but I would have thought that it would escape the French tax charge which would be difficult to enforce.

If you make gifts to your children, they will fall out of your estate for Inheritance Tax purposes so long as you live for seven years after making them.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Thanks for the prompt reply! So if that amount of money is sent direct to our bank account the uk authorities would not question it? Presumably the bank may ask for the origin due to money laundering legislation. Is it the banks responsibility to check up on this? Are there any other tax issues I need to be aware of before we make the transfer? And... can you do something to make the euro a bit stronger????!!!!

It would be as well to warn your bank in advance of the transfer. If your wife's aunt can write you a letter confirming the gift, that will prove to anybody who asks such as HMRC where the money came from. The gift receipt does not need to be reported to HMRC.

I can't help with the Pound/Euro exchange rate I'm afraid. If I could, I would be "sitting on a beach earning 20%" as Alan Rickman said in the Die Hard movie when he broke into a vault containing $750,000,000 in bearer bonds.

Take a look here for information on IHT taper relief and here for information on Inheritance Tax generally.
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