Tax and private school fees

[captaincannot]

My parents have been paying my children’s private school fees (£4K/term) for a couple of years. They pay it straight into my account and then I pay the fees. My friend has said I might be in for a tax bill? Are they right?

Not if it's clearly a gift. If you do any work for them that might be seen as something that people might normally be paid for then it could be treated as income for tax purposes.

Is your friend thinking of IHT? If your parents give you money and then die within 7 years of that gift then it counts as part of their estate and you may have to pay IHT on the money (I believe there’s a sliding scale for the percentage you pay?).

no income tax and It’s possibly exempt completely from IHT even if there is a death within 7 years under the following:

• Gifts Out of Surplus Income: Regular gifts made from your surplus income (after all living costs are met) are immediately exempt from IHT, provided there is a regular pattern of giving and it does not affect your standard of living.

Is there any reason they can’t pay the school directly?

This.

Be aware that if you want to claim the gift out of regular income IHT exemption you (your parents here) have to keep very detailed records of your income and your expenditure - spreadsheet setting out how much you spend on food, utilities, transport, leisure activities, hols etc. Executors can’t just tick a box to claim it, they’d have to have the records to back it up.