Gifting money to kids ?

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The point remains, why buy a property (in London) if you don't intend to use it for a long period of time?

And the days of "Buy to Let" producing good tax-free income and capital appreciation have certainly gone since Osborne started changing the rules of the game nine years ago.

If it's going to be a home in London for a decade, then everyone wants a home, so it's worth paying a lot of money and going through 6-9 months of buying, followed by the same a decade down the line. Try to do that sooner and its money down the drain.
I received an update from one of my investment companies which included advice for over 70s, but it also included this section on gifting to kids, which might be of interest. Credit where due - it's from Fidelity.

"When you die, inheritance tax (IHT) is charged at 40% on the part of your estate above the threshold which is currently £325,000. The threshold rises to £500,000 if your home is given to a child or grandchild. As a married couple this gives you the ability to pass on property worth up to £1m completely IHT-free. This though only applies as long as your estate is worth less than £2m overall.

Whether you can gift them that money IHT-free though, depends on the amount you give and whether you survive more than seven years after giving them the money.

Under the seven-year rule, you can gift any amount IHT-free as long as you live for at least seven years after giving the financial gift. If you die at any time within the seven years, a reduced rate of IHT applies to any amount above your nil-rate band (currently 40% within three years, 32% after three years, 25% after four years, 16% after five years and 8% after six years).

There are other ways around it though if you gift smaller sums. For instance, you can give away £3,000 per year (in assets or cash), divided between one or more people, without IHT applying at all. You can also carry forward one preceding year of annual exemption to gift £6,000 in one year.

You're allowed to give £250 per person per year to as many people as you like without IHT applying (as long as they haven't benefitted from your annual exemption).

You can contribute to someone's wedding, as long as you gift this amount before the wedding day and it actually takes place. You can give £1,000 to anyone you know, £2,500 to a grandchild and £5,000 to a child.

You can pay for the living costs of your own child under age 18, or in full time education. This includes university, but you may need to show that financial support is not excessive and only covers living costs and tuition fees.

You can also give regular amounts away that you don't need from your income, without IHT applying. You may have to show that this money was not needed to maintain your standard of living.

If you want to pass on larger sums and have it happen after your death, then you could speak to an adviser about possibly placing the money into trust."
^^^. This is good, written in clear, understandable language. Copy and paste it onto a document to save!!

I’d just like to endorse that, as they said, the ‘regular giving’ must be seen to come from income, not savings, in order to be exempt. Setting up a standing order is possibly the best way of proving the ‘intention to give’ - I believe there’s a case precedent where only one rather large payment was made before the donor died, but as it was by SO, it was valid.

I’d’ve liked to see a mention of trusts, even with disclaimers, but having said that, this type of article couldn’t go into detail.
Some lenders want to see the accrual of funds, however, most will leave it to the conveyancer to confirm source of funds.

I’d be wary of hiding the gift on a mortgage application as it’s fraud which is, of course, a criminal offence. The gifted deposit letter really is no big deal in comparison.
Without wanting to labour the point, I received an email from a major UK lender this morning with a reminder of their requirements which I have pasted below:

From Monday 10 June we're making some important updates to our deposit requirements.

Gifted deposits

Where any part of the deposit is gifted, the following additional questions will be asked in the full mortgage application (FMA):

o Occupation(s) of the person(s) providing the gift.

o How has the giftor(s) generated their funds?

Applicant’s own savings

Where any part of the deposit is from the applicant’s own savings, the following additional question will be asked:

o How has the customer generated their funds?
Suppose AML (No, not Aston Martin Lagonda) rules are to blame, but these ^^^ do seem a bit extreme.
I drew £1k in cash from my bank recently. The cashier asked me why I wanted so much cash.

I told her to bet on a horse at Goodwood & to pay for a day out! She didn't respond!

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