£3k tax free gift limit - do I need to think about it?

[roarfeckingroarr]

I understand there's an annual £3k tax-free gift allowance from parent to adult child, but could use advice on whether it applies if you have a parent who pays a regular amount of money to support living costs? For example, if you're unemployed or on maternity leave and a parent pays half your childcare bill or towards your children's clubs. If that comes to over £3k annually, would someone have to pay tax on it?

I'll be honest - that seems crazy to me. Some people have regular free childcare from their parents, whereas some support in other ways they can, such as financially. My own parent wouldn't be able to look after my child due to his own ill health, but he would like to help out while I'm on mat leave. Do I need to think about the £3k limit in this circumstance? Thank you.

no if its from income then you can give as much as you want but not from savings

Thanks for your response, but I'm not sure what that means. Parent is retired so some will be from his savings. How would HMRC know the difference?

I'm unsure how this makes sense, surely savings are the result of income so why would that make any difference? Am I missing something?

I think education is tax free ‐ hence grandparents paying for private school. Not sure if this applies to clubs.

My understanding is that if it's paid directly elsewhere - eg to a credit card company, or a childcare provider, etc; it doesn't count.

It's just payments of cash that are limited. If your parent wants to help out, he can pay into the childcare account.

That's interesting, thank you. He won't do that because he would consider it too complicated... I'll look into the education aspect.

The limit seems awfully low in modern money.

There is no gift tax in the UK. Anyone can give anybody any amount they like. However, if the donor does within 7 years, there may be inheritance tax to pay on the gift.

if the donor does die within 7 years, then the first £3k of any gift is exempt under the annual allowance that you have referenced.

In addition, if the donor had surplus income (not saving) and had been giving any amount regularly out of that surplus, that too would be exempt.

The £3k limit only applies if the person dies within 7 years of the gift, in which case the estate may have to pay inheritance tax on the amount. Otherwise you don't pay tax on gifts.

Yes, you've got the wrong end of the stick I think. My mum gave away hundreds of thousands before she died, but the important thing was that she gave it more than 7 years before her death.

Phew thank you ! I thought it was something I would need to declare on my own self assessment next here. Thanks for clearing up

Tax would only be liable if whoever gave the money died within 7 years. My parents gifted us deposit money for our flat with no tax to pay either side.