Financial gift and tax

[742386w]

A relative who lives overseas has sent me £13,000 completely out of the blue. Obviously this is a wonderful surprise and comes as a time of financial stress.

I just wondered how much I should keep aside for tax purposes? Presumably it will incur a tax bill at the end of this financial year and if he dies in the next few years. He is elderly and unwell.

Is there a way to have £3,000 of it paid out directly to each of my children without having to ask him to rewrite 3 cheques? I’m sure he would be offended or not understand the logic (at his age and living overseas).

There is no tax on gifts, so there will be no tax bill at the end of this financial year. Any tax bill when he dies will be paid by his estate, not you. I'm not clear why you want the money from him paid direct to your children, but the only way of achieving it is to get him to write the appropriate cheques. However, the effect is no different from you putting the money into your account then transferring it to your children.

Thanks for your reply. I just thought that it would be classed as an ‘other income’ and might need to be included in a tax return. Also, as my children are in university, I have to include all income on my part of the application from.

I know that financial gifts more than £3,000 incur a tax bill so I thought that this could be avoided if part of it could be rerouted to the children instead.

I can confirm that there is no tax to pay. Enjoy your windfall!

Do you receive any benefits op?

Sorry, just saw your second post - it is not classed as income so no need to declare it anywhere. It is a capital gift.

Financial gifts of more than £3,000 may incur an inheritance tax bill when the donor dies. However, that only applies if the donor is subject to UK inheritance tax. Even if there is a tax bill, it is paid from the donor's estate. You will never have to pay tax on this gift.

As @Plantstrees says, you do not have to declare this gift for tax purposes, nor do you have to declare it for student loans.

No I don’t receive any benefits.

Thank you for your replies, unexpectedly great news! I wasn’t sure if I needed to put any of the money aside in order to pay the price for having it.

The £3k is a total per giftor per year, so splitting it would make no difference anyway.