Being gifted money.

[TheBestAMamCanGet]

My lovely brother has had a large windfall and wants to share it with me.
The initial plan is a 6 figure sum which will allow me to pay off my mortgage, do up some neglected areas of the house, go for a holiday and treat the kids. He’s said he wants to go further and send further, regular but smaller amounts to take care of bills and give us the freedom to go on regular holidays and, in his words, live our best lives.
I’m overwhelmed at the enormity of it, it’s life changing, and I am so grateful that he’s willing to share it.
I have questions though, mainly about tax. I am self employed, earn roughly £20k per year, currently on UC which I assume will stop.
Will I need to pay tax on this money or any other gifts going forward? Google isn’t very clear on this. I’ve asked my brother but he’s unsure and had assumed that a gift is a gift.
Could I save some to use as a pension one day? Are there tax implications in that?
Does anyone know?
Thanks!

Why can’t your brother pay your mortgage off as it won’t touch your bank account then?

He could also give you a credit card to use for spends - holidays etc.

Depends on amounts really.

I know my Aunty paid my nans bills directly. She never saw them.

I don’t know. I can ask him if that’s an option. I think he wanted it to be simple, just transfer the money to me and I spend as I see fit.
Would the money going into my account be an issue?

Regular payments would stop your uc. Anything over 16000 would also stop your uc. I would recommend doing as pp said and credit card it and him just pay the mortgage

I’m happy for UC to stop, I won’t need it.

Well surely it's immoral to claim UC if you're getting 6 figures and a regular tidy income.

UC is for people who need it. The OP won't need it anymore. Why are posters suggesting ways she can fiddle the system?

Ffs. No wonder this country is fucked up.

Well that is true. I was thinking along the lines of if it opens other benefits that they might loose while losing uc.

UC will stop. As you're self employed you'll need to declare any income from him. He can transfer money to you, it's best to inform the bank in advance and make an appointment to speak with their financial advisor.

Yes I’ll do that.
There seems to be a grey area whether money gifts are considered income or not!

A regular gift might be, I'm no expert. You may prefer to invest some, especially for your children.

Some googling has showed up this.

There is no gift tax in UK. However much money your brother gives you, there will be no tax to pay.

There is no tax due by you on the gifts from your brother. In terms of using it to pay into a pension, the annual limit will depend on the type of pension, how much you've paid in over the last few years and how much you're earning from your employment at the time.

The risk is of he were to die within 7 years and the value of the gifts in excess of annual allowances , or a proportion reduced over time, would revert to his estate for IHT purposes.

If your brother were to die within 7 years of the lump sum gift you would owe inheritance tax - potentially quite a significant fraction of the gift.

www.gov.uk/inheritance-tax/gifts

As you can see from the same link there are various rules to consider so I'd get some proper advice on the exact circumstances you are in.

I got compensation of nearly 3 million.
I just bought both myself and both daughters an house each.
Gave them gifts of money( no Tax). Put some into accounts for Grandsons ( eldest got his when turned 18 last year).

The OP would not owe inheritance tax.

The brother's estate would be treated as if he hadn't given a certain sum of money away and his estate would be taxed under the presumption.

A deceased's estate is liable for IHT, not the person to whom a monetary gift is made.

When a lovely brother you have, he obviously adores you. ♥️

What a lovely brother you have! Such a blessing!

We dont know your age but still I would prioritize to invest that money rather than spend it ! perhaps 1-2% spend it however I would suggest invest and watch the magic of " Compounding"! You will be much more finacially sound and your children will have safe secure future.

I would look into options such as

1. Maximise your and your partners Stock and share ISA first. 20K each Max per tax) year
2. Open a Pension SIPP account and invest in ETF's (60K max per year depending on income - you can check this based on your salary)
3. Open kids junior Stock and share ISA (9K each child per tax year).
4. You can choose 1 or 2 Eft for all these accounts.

I would not prioritize paying off mortgage fully. I would prioritize on "investing".

( Here are some links to get you started
Contributing to a family member’s pension
Did you know it is possible to contribute to someone else’s pension?

https://www.mfpwealthmanagement.co.uk/blog/contributing-to-a-family-members-pension#:~:text=As%20long%20as%20your%20contribution,relief%20at%20their%20tax%20rate.

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Can someone else pay into my ISA?
No, someone else can't pay into your ISA - at least not directly.
The ISA rules, set by HMRC, say that contributions to an ISA must be made with your own cash. You can add cash to your own ISA using a debit card or transfer from a bank account in your name - or a joint account you own.
This means that someone else can’t directly add cash to your ISA.
The exception to this rule is a Junior ISA which can accept cash from anyone. Provided there is enough Junior ISA allowance remaining.
What if I need to pay into someone else’s ISA?
If you are looking to pay cash into someone else’s ISA, you can send them the cash first to their bank account, and they can then make the contribution using an instant bank payment or their debit card.
https://www.ii.co.uk/ii-accounts/isa/faqs/can-someone-else-pay-into-my-isa

Parents or legal guardians can start a Junior ISA for their child. Family and friends can then add money too.
https://www.hl.co.uk/investment-services/junior-isa

You are talking large sums of money. It might be an idea for your brother to see an Independent Financial Adviser first.

If it's a gift each/every month from your brother's "excess income" e.g. money earned but not spent, then no tax implications