gifts of money

[Cumbria41]

My ex husband wishes to give our children a gift of money but has been told that this is restricted to something like �5000 each a year and anything more than this incurs costs. Can anyone tell me if they know anything about this.

[factor-fiction]

He can give as much a she wants but if he dies any gifts over a certain amount given in the last 7 years count towards teh value of his estate for inheritance tax purposes. But unless he has an estate worth several hundred thousand poundsinheritance tax won't be an issue

[Tom Braider]

There's no limit on how much you can give or invest for your children or grandchildren. But the interest might be taxed as your income if you're the child's parent or step-parent and your child's unmarried, not a civil partner and under 18

Each parent has a separate �100 limit. So if both parents contribute equally your child could get interest of �200 a year without either of you having to pay tax on it.

There's a separate �100 limit for each step-parent too

[anniebird]

He is allowed to give up to �3,000 in each tax year and if he has not given any last year he can make it �6,000 for this year. There will not be any IHT on these gifts even if he does not live for a full seven years after making the gift.
Any gift over this amount will be a 'Potentially Exempt Transfer' and will not be included in his estate as long as he survives for seven years. He is also allowed to make 'Gifts Out Of Income' which must be regular and given out of his normal income from say his Salary. It must not reduce his standard of living nor be paid from Capital such as a savings account. The point made by Tom Braider about interest being taxed as the parents is correct.

[R1Geezer]

there is no limit on gifts, it only becomes an issue for IHT as above.

[sp1214]

Make sure you have a record of when you hand the money over. Anyone can say the gift was given long before it actually was so they will have to prove it.