Tax liability on a gift

[jahon316]

I have been working as a charity worker (in social development ) in Asia for many years and returned to the UK to live about 3 years ago. The chairman of a charitable trust recently contacted me to say that the trust would like to give me a sizeable gift to help me get onto the property ladder, without which it would be impossible. Am I liable to pay tax on this gift?

[Mrs_Pegasus]

Yes. There is a limit on the size of gift you can receive in any one financial year, I think its between �3k and �3.5k. You are in fact being paid for your work even though you say it is gift. Another way of thinking of it is that it would be a great way of avoiding tax if we all worked for a number of years without paying tax or NI and then were 'gifted' a lump sum.

[Trotbot]

Are you still working for the trust? If so, at least a proportion of the payment will be taxable for the reasons Mrs P outlines. However, you may be able to argue that the gift should be taxed on a pro-rata basis accross all the years you have worked, but it is likely to be a tough argument to make.

If you have not worked for the Trust in the UK then you may be able to argue that it relates to previous offshore activities.

You should disclose it to the Revenue and seek a ruling. Given they lean towards taxing, you should consider getting professional advice first so the best arguments can be presented.

[Beanmistriss]

Is it just me or does that seem really dodgy? Maybe I've just got a suspicious nature

[themas]

You say the chairman of "a charitable trust". This gives the impression it might not be the trust you worked for. If that is the case, then this gift could presumably be seen as having nothing to do with your employment. What are the aims and objectives of the trust concerned? Would the gift be something that could be seen as part of their normal activity? In other words, do they do this sort of thing for other people, or something similar?

So far as I know normal gifts by charities to individuals are not taxable.

[jahon316]

Thanks all for your input - very much appreciated. The trust has nothing to do with my previous work. It is a Christian charity which does this kind of thing and I was contacted out of the blue.