Receiving money from parents to invest in my pension

[TopStar74]

My parents have kindly offered to give me 6K this year for me to invest in a SIPP I hold in. Money will either be transferred to my bank and I will transfer to the SIPP or they are happy to invest directly into my SIPP. I wanted to know, will I be liable for tax for that 3K? Will my parents be liable for anything? I don't think them giving me the money would be a problem, but not sure how does this work please. Apart from taxes which either of us may be liable for, is there anything else I need to think off?

[swill453]

There's no tax liable on a gift, so no worries there.

If your parent(s) were to die within 7 years of giving you money then there is potentially Inheritance Tax to consider, though that will be affected by a lot of other factors:
- whether their estate is above the threshold
- what other gifts they've made
- etc.

As far as the deposit into the SIPP is concerned, you should get tax relief, assuming you have sufficient income and allowance to cover it.

Scott.

[TopStar74]

Thanks Scott!

[Lootman]

There's no tax liable on a gift, so no worries there.

If your parent(s) were to die within 7 years of giving you money then there is potentially Inheritance Tax to consider

I suspect the parents may have chosen 6K as the gift because the IHT-free allowance is 3K a year but you can gift an extra 3K in a year if you made no gift in the prior year.

I do the same thing with my children. Rather than give them 3K a year, I give them 6K every two years.

[PinkDalek]

I suspect the parents may have chosen 6K as the gift because the IHT-free allowance is 3K a year but you can gift an extra 3K in a year if you made no gift in the prior year.

Alternatively, two parents (the OP mentioned parents), each giving £3,000 per annum or perhaps £6,000 in total per annum out of a joint bank account.

I do the same thing with my children. Rather than give them 3K a year, I give them 6K every two years.

When you say Children, doesn't that put you over the annual exemption (knowing you know your IHT stuff, so not attempting to make this thread into a lengthy IHT related thread) or are you selective about which child receives the £6,000 every second year and the other receiving £6,000 in a further two years?

[AJC5001]

There's no tax liable on a gift, so no worries there.

If your parent(s) were to die within 7 years of giving you money then there is potentially Inheritance Tax to consider

I suspect the parents may have chosen 6K as the gift because the IHT-free allowance is 3K a year but you can gift an extra 3K in a year if you made no gift in the prior year.

I do the same thing with my children. Rather than give them 3K a year, I give them 6K every two years.

But as there are two parents, each could gift £3,000 for this tax year plus £3,000 from the previous, so the maximum would be £12,000 allowance available.

Each could be giving just the current year £3,000.

It might be more effective if it came from only one parent, as the other would then still have their £6,000 allowance remaining.

Adrian

[supremetwo]

I don't think them giving me the money would be a problem

The IHT exempt-gifts allowance of £3000 has been mentioned, but money given from income, provided it does not reduce the 'standard of living' of a donor is also exempt and the amount is unlimited.

http://www.pruadviser.co.uk/content/kno ... ure-facts/

[swill453]

We do get a bit hung up on IHT though. The parents could give £100,000 with no tax to pay, and even if they were to die within 7 years, the IHT position would not be any worse than if they had held on to the money and left it as a bequest in their will.

Scott.

[Lootman]

I do the same thing with my children. Rather than give them 3K a year, I give them 6K every two years.

When you say Children, doesn't that put you over the annual exemption (knowing you know your IHT stuff, so not attempting to make this thread into a lengthy IHT related thread) or are you selective about which child receives the £6,000 every second year and the other receiving £6,000 in a further two years?

The total amount of the gifts to my children that I regard as constituting my exemption is 6K every 2 years. That is the total across all of them. I have in fact made much larger gifts to them in various years, but those are made to a different child than the one that gets the 6k exempt gifts.

I try and keep track of it all and my accountant likes me to give him a diary of these various gifts, to make it easier upon my demise.

My wife has her own money, makes her own gifts and so the numbers I gave were just for my individual gifts.

[TopStar74]

Sorry, just to clear any misunderstanding - My parents have not given anything previously. This is the first time. And each parent (mum and dad) is giving me 3K + 3K. I also don't think I might receive anything next year (who knows.....I hope I do!)