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'Pocket money'


A mother pays her son (an adult) £400 per month as 'pocket money' to help ends meet whilst he is living in London.  The money is paid out of taxed earnings so there is no problem for the donor.  She is just wondering if there may be a problem, or a limit, for the recipient.  The son is earning some money but not enough to survive. Thanks for any assistance.


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By Old Greying Accountant
07th Mar 2012 19:33

Dont quote me ...

... as long as it is out of surplus income shouldn't be a problem, if not then the IHT rules may come in to play if anything happens to the mother and they may become chargeable.


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08th Mar 2012 09:25

Agree with OGA

There should not be any income tax issues if it is a gift.  For inheritance tax, it will not be counted (in his mother's estate if she were to die within 7 years of the gift) as long as it is a regular gift out of her income which is part of her normal expenditure - blurb from HMRC's website can be found here:


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12th Mar 2012 13:18

Benefits issue

There would be a problem for him if he was claiming any benefits (like jobseekers allowance, council tax / housing benefits) - not from a tax perspctive but from a fraudulent claim made.

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By cfield
12th Mar 2012 23:17

Standard of living

As already mentioned, the £400 should qualify as an exempt gift if it comes out of her income rather than her savings. It should certainly count as "normal" if it is a monthly payment. However, it must not reduce her own standard of living, which could be difficult to prove if she dies within 7 years.

Might be an idea for her to keep basic records of income and expenditure so this can be proved by her executors.

Remember also that she can deduct £3,000 for her annual allowance so only the balance needs to be treated as a normal gift out of income.


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