Gift tax

[sassyx]

Hi, I'm really confused with tax and gifting money if someone could please explain it in simple terms! I recieve a lot of help from my grandma financially, she gives me £200 a month to help with living costs. She pays for a lot of other things for me too. She is due to get some money which she is kindly gifting to me, we're not sure how much yet, could be between 10-20k.. will I have to pay tax on this? I've looked at government website and it says only allowed tax free for 3k a year and obviously the money she currently gives me is already 2400 a year

You don't pay tax unless she dies within seven years of the gift, in which case the value is included in the IHT assessment . There are also annual exemption allowances for cash gifts which the regular payments should fall under and specific gifts like for a wedding. Although that could change in the Budget.

She can gift you excess income if it does not impact her standard of living. Must be from income, not capital and a record of her expenditure and income needs to be kept. These gifts are exempt from IHT seven year rule, but you need to submit your records (IHT403). She can gift £3k from capital free of IHT, anything over will fall within the sliding scale of the 7 year rule. Of course, that could all change tomorrow.