how can i stop my 10K inheritance money form being taxed.....

[mum2sam]

hiya my mum inherited some money from my grandad and is giving me a share as early inheritance. Dp and i buying house soon but she wants to pass it on to us now as she doesnt want her savings to get taxed etc or for it to affect her money.I will be putting 5k down for a deposit but not until the few next months and the rest i want to put away. I mean will i get taxed on it. Dp works and im a sahm etc but i do claim working tax credit.

As far as I know neither you or your mum will have to pay any tax on it unless she dies within 7 years. If you save it though you will pay tax on the interest unless you have declared to the bank/building society that your income is less than the personal allowance and so you are not liable for tax.

Assuming that you and your mum are in the UK you shouldn't be taxed on it (though there is a small possibility that there may be some tax if your mum died within the next 7 years leaving an estate in excess of the nil band for inheritance tax). You are subject to tax on any interest you earn, but if you are not working then presumably you are not using up your personal allowances and therefore shouldn't have to pay tax on the interest.

I don't believe that you should be taxed on any interest as you have a personal tax allowance which you are not using if you are not working.

Don't take my word for it though - I'm not an expert and I don't know anything about working tax credit

aha - I see others posted before me

well dp earns 30k a year and i dont work i only claim child benefit and working tax credit. How much personal tax allowance am i allowed? This is all very confusing

Tax free allowance for 2006-07 is £5035. For 2007-2008 it will be £5225. You will not have to pay tax on the gift from your mother. If she dies within the 7 year limit and her estate is subject to IHT there may be an amount for the estate to pay - but not for you to have to cough up.