Inheritance tax.

[pete01]

adult kids?

Yes

 

[gas112]

Cash as in Cash? I assumed you meant transferred when you said "took out". Isn't the OP wanting to gift it as inheritance?

Yeah cash .
Yes they are but as I said there is means the taxman would have no way of checking what you done with your money

 

[pete01]

The confusion comes with the term "kids".

The maximum you can give a child without tax is the £3k - this is because children don't pay tax on savings and its a way to stop parents avoiding tax by hiding it in their children's accounts.
When it comes to gifts to adult children. it's as per the thread.

I'm comfused again now (easily done), so does what I said in the opening post still apply to adult children?

 

[motorbiking]

Adult kids - give as much as you like up to the estate limits, time/IHT expired after 7 years.

 

[motorbiking]

Yeah cash .
Yes they are but as I said there is means the taxman would have no way of checking what you done with your money

I try to avoid anything that would result in an audit, but my understanding is they would apply for an add back. Similar to divorce law. Highly unlikely on the scale we are discussing though.

 

[MNW67]

The maximum you can give a child without tax is the £3k - this is because children don't pay tax on savings and its a way to stop parents avoiding tax by hiding it in their children's accounts.

I'm really confused now about the rules for children under 18. Are we talking about income tax. I have not found any reference to a £3K IHT limit specific to minor children.

I found this:

 

[Ihavenojob]

You could try giving your children gold and silver coins with a UK face value. A silver 1oz Britannia has a face value of £2, a gold 1oz Britannia has a face value of £100, though bullion value is about £25 and £2450 respectively. So £1000 in gold Britannias would be worth about £24.5k, and they are CGT free.
The price of precious metals is volatile, they go up and down, just like stocks and shares. This is just my thought on this, you really should seek expert advice if you want to outwit HMRC.

 

[pete01]

Adult kids - give as much as you like up to the estate limits, time/IHT expired after 7 years.

If you had a 300k house and gifted 20k to two adult kids, 10k each, you'd be 5k under the limit so no tax would be payable, correct?

 

[motorbiking]

I'm really confused now about the rules for children under 18. Are we talking about income tax. I have not found any reference to a £3K IHT limit specific to minor children.

I found this:

View attachment 381426

- Gifts to kids under 18 that earn more than £100 a year in interest are subject to your income tax allowances. i.e. you are liable for the income tax on their savings above this.
- You can give up to £3k (plus the getting married option and the small gift option), per year which will be exempt from IHT.

Clear?

So I can give my adult child £20,000 and if I live another 7 years it's not deemed part of my estate. If they earn interest on this money, that goes against their income tax allowances. If they are under 18, I am responsible for the income tax on the interest, because they don't pay tax (above £100 each).

If you had a 300k house and gifted 20k to two kids, 10k each, you'd be 5k under the limit so no tax would be payable, correct?

Under 18 assuming 3.5% interest
20k. each = £1,200 worth of income to declare for tax purposes (yours that is).
If you die within 7 years the 20k gets added back to your estate (according to the tapered allowances)
Over 18 as above, but they are liable for the interest on the money.

Of course there are various tax efficient options.

 

[Ihavenojob]

I'm sure being a couple makes a huge difference, My dad died about 15 years ago, my mum died last year. The threshold for her estate was over £1million (it wasn't worth that though).

 

[Jurassicspark]

I'm sure being a couple makes a huge difference, My dad died about 15 years ago, my mum died last year. The threshold for her estate was over £1million (it wasn't worth that though).

The nil rate band can be transferred to a spouse if the wife/husband passes away. Even if there is only 10k left of the allowance it can still be transfered.

If the estate goes to direct descendants then another 175k will be added to the original 325k.

 

[motorbiking]

I'm sure being a couple makes a huge difference, My dad died about 15 years ago, my mum died last year. The threshold for her estate was over £1million (it wasn't worth that though).

yes.

each person has a 375k allowance + 125k Nil rate allowance if transferred to direct descendants.
If they are married it can be transferred to their spouse upon death.

thats how you get to the £1m

 

[blup]

But if I took ten k out my bank gave it to a relative how would they know where that money went. As it happens I gifted over 6 figures about 4 years ago only person informed was solicitor dealing with house sale it was for..

I doubt hmrc have the resources to follow up such payments unless they have reason to. But increasingly banks - for anti money laundering reasons - ask the reason for payment. If it is stated to be a gift, there are potential IHT implications. Solicitors also ask for proof of the source of any third party contributions to a mortgage deposit. So the information may be there even if it is not acted upon.

 

[Deleted member 317777]

Actually it would affect us ……

IHT is charged at 40%

So you’re happy to give the government 40% over 1 million.

That’s up to you. I’m not

 

[Murdochcat]

yes.

each person has a 375k allowance + 125k Nil rate allowance if transferred to direct descendants.
If they are married it can be transferred to their spouse upon death.

thats how you get to the £1m

Not sure I agree with those figures.

It’s £325k per adult and if married it’s then £650k - and if the principle home can add £175 per adult - which makes £1 million And that can ONLY pass directly DOWN the blood line, not across it or to friends