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Original poster

Will I have to pay tax on a house deposit gift ?

14 replies

Lastchancesaloon1 · 06/07/2023 15:33

So my parents have said they will give me 30k toward a house deposit but my mum is concerned that as it is a gift that I will have to pay tax on this if they die within 7 years of giving me the cash gift? They are both elderly.
Is this the case?

OP posts:
Goldfoot · 06/07/2023 15:36

If the estate incurrs inheritance tax, ie is over the threshold, then yes IT will have to be paid on any gifts given within 7 years of the death.

Goldfoot · 06/07/2023 15:37

Goldfoot · 06/07/2023 15:36

If the estate incurrs inheritance tax, ie is over the threshold, then yes IT will have to be paid on any gifts given within 7 years of the death.

It's not "you" who pays the tax, it's the estate, which may amount to the same thing, but the tax would have been due anyway.

It's also on a sliding scale depending on how close to the death it was given.

ZacharinaQuack · 06/07/2023 15:42

If they haven't given away more then £325k then as PP says it is the estate that will pay the tax, not you. However, they also each have a £3k annual exemption which is not liable for inheritance tax. If they didn't give £3k in gifts last tax year, they can carry that over too. So each parent could potentially give you £6k which is definitely tax-free, and it'd only be the other £18k that might be liable for IHT.
https://www.gov.uk/inheritance-tax/gifts

How Inheritance Tax works: thresholds, rules and allowances

Inheritance Tax (IHT) is paid when a person's estate is worth more than £325,000 when they die - exemptions, passing on property. Sometimes known as death duties.

https://www.gov.uk/inheritance-tax/gifts

Original poster
Lastchancesaloon1 · 06/07/2023 15:43

My mum said it's called a gift tax? I think she thinks the inheritance thing is a separate issue?

OP posts:
Original poster
Lastchancesaloon1 · 06/07/2023 15:45

So is this an Inheritance tax issue? Not a gift tax issue?

OP posts:
Original poster
Lastchancesaloon1 · 06/07/2023 15:46

Sorry I don't think I understand

OP posts:
JeandeServiette · 06/07/2023 15:49

Lastchancesaloon1 · 06/07/2023 15:45

So is this an Inheritance tax issue? Not a gift tax issue?

Yes.

Just encourage them to stay alive for at least 7 years.

Merrow · 06/07/2023 15:50

It's an inheritance tax issue, and the description of it for inheritance tax purposes is "Lifetime gift".

Original poster
Lastchancesaloon1 · 06/07/2023 16:10

Do both parents have to die for to pay it? Or what if just one parent does within the 7 years?
Sorry I know it sounds morbid but just trying to get my facts right about this

OP posts:
messybutfun · 06/07/2023 17:39

There is no gift tax.

For seven years any gifts will take up the nil rate band and then drop out of the estate. As long as all gifts are within the £325,000 allowance per person there is no tax to pay. The estate has to pay any tax due above that amount.

There is no taper for gifts within the allowance.

Depending on whether the money actually came from a joint account or from one of your parents, they get £3,000 each gift allowance per year and you can carry one year forward, so potentially if one of them dies within 7 years the value of the gift is £9000 which will reduce the nil rate band.

Stripeysocks00 · 06/07/2023 17:49

Goldfoot · 06/07/2023 15:37

It's not "you" who pays the tax, it's the estate, which may amount to the same thing, but the tax would have been due anyway.

It's also on a sliding scale depending on how close to the death it was given.

Show quote history

If IHT is due on lifetime gifts then the recipient is liable to pay, not the estate.

OP, unless they have made other significant gifts then it is unlikely you will have to pay any tax on their death.

LIZS · 06/07/2023 18:13

Some gifts are exempt and the liability can be reduced over time. You won't pay any iht, only the estate. www.gov.uk/inheritance-tax/gifts

ZacharinaQuack · 07/07/2023 08:58

OP, do your parents have lots of money? Many estates are not liable for IHT anyway, in which case it wouldn't matter.

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