Will I have to pay tax on my mother's cash gift? |
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Source: Financial Mail Women's Forum, September 25th, 2010 My mother recently sold her house and would like to gift to my sister and I £15,000 each. Would we have to pay tax on this gift? Are there any other financial considerations we should be mindful of? I would like to pay the money straight off my mortgage - would it be best if my mum wrote the cheque to the lender directly rather than me? - Sally, Hampshire There will be no immediate tax to pay for these gifts as they fall well below the inheritance tax nil rate band. Your mother also has an annual gifting exemption of £3,000 each tax year, along with the previous year's exemption if this has not yet been used. This means that up to £6,000 of the total gifts of £30,000 is exempt from IHT. If your mother survives 7 years from making these gifts, there will never be any tax to pay on the remaining £24,000. Otherwise, the amount would be calculated in her estate and may be subject to IHT at 40% (assuming that the estate's total value exceeds the nil rate band of £325,000.) When repaying your mortgage, there is little practical difference from a taxation point of view in paying you first or direct to the lender. - Lesley Collins, Chief Executive, Independent Women
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