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Gift received from parents

Reporting to HMRC

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Hi

Our client received £6,000 from a parent, as a part of the IHT Planning. Does the client need to report it on his tax return? I believe not, as this is within the £3,000 annual exemption, including £3,000 carried forward from the previous tax year.

Many thanks

 

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By Matrix
10th Dec 2020 19:37

If they received £1m do you think it would go on the tax return?

I think your client must have listed everything for you to pick from. Better to have more info than too little though.

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By Paul Crowley
10th Dec 2020 19:37

No
Nothing to do with income tax or CGT

Thanks (1)
By Duggimon
11th Dec 2020 09:35

The annual exemption is irrelevant. Your client doesn't need to report gifts.

Were the gift to come into the charge for IHT it would be a matter for the estate.

Thanks (1)
RLI
By lionofludesch
11th Dec 2020 10:07

Where were you thinking of putting it on the return?

IHT is a tax on the donor, not the donee. Well, usually, anyway.

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Replying to lionofludesch:
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By C.Y.Nical
14th Dec 2020 13:14

lionofludesch wrote:
IHT is a tax on the donor, not the donee. Well, usually, anyway.


Every time I have said this to anyone I have been shouted down. I am always told that the donee must pay the tax and one of my business colleagues is currently budgeting 40% x £125k in respect of a gift of assets he received from a donor who died less than a year later. In his own words he is "keeping his head down" and not reporting anything to anyone but he is convinced he will get a demand one day.
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Replying to C.Y.Nical:
RLI
By lionofludesch
14th Dec 2020 13:15

C.Y.Nical wrote:

lionofludesch wrote: IHT is a tax on the donor, not the donee. Well, usually, anyway.

Every time I have said this to anyone I have been shouted down. I am always told that the donee must pay the tax and one of my business colleagues is currently budgeting 40% x £125k in respect of a gift of assets he received from a donor who died less than a year later. In his own words he is "keeping his head down" and not reporting anything to anyone but he is convinced he will get a demand one day.

Ah .... well .... he might be right.

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Replying to C.Y.Nical:
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By DJKL
14th Dec 2020 14:12

Depends upon the terms of the gift.

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By whitevanman
11th Dec 2020 10:22

Agree nothing to put on tax return, however, would advise client to obtain and keep, evidence of the source of the gift, just in case HMRC enquire into a return and pick-up on the receipt.

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