Question About Tax

[Teesix]

Hi all

It's like this: Our van goes in for its conversion in Feb. The cost is going to be around £20k. As coincidence has it, my mother-in-law has decided to give us a cash gift of £20k which is bloody useful as we can use that cash for the conversion.

Now I understand that you can gift someone up to £3k per year without incurring any tax penalties. I'm assuming we would have to delcare the gift to the tax man? Is that right?

Secondly, let's assume she doesn't give us a physical cash gift but instead, pays for the conversion directly herself. With the cash gift now effectively going directly to the converters instead of through our bank account, does that somehow circumnavigate the taxable element of the £20k?

I'm not trying to evade the tax, I'm trying to avoid it lol

 

[Salty Spuds]

Hi all

It's like this: Our van goes in for its conversion in Feb. The cost is going to be around £20k. As coincidence has it, my mother-in-law has decided to give us a cash gift of £20k which is bloomin useful as we can use that cash for the conversion.

Now I understand that you can gift someone up to £3k per year without incurring any tax penalties. I'm assuming we would have to delcare the gift to the tax man? Is that right?

Secondly, let's assume she doesn't give us a physical cash gift but instead, pays for the conversion directly herself. With the cash gift now effectively going directly to the converters instead of through our bank account, does that somehow circumnavigate the taxable element of the £20k?

I'm not trying to evade the tax, I'm trying to avoid it lol

She can give you as much as she likes as long as she lives for 7 years afterwards. If she dies within the 7years, tax will be due on the “gift “ on a pro-rata basis.

Inheritance Tax

 

[Teesix]

Thanks for that SS.

Much appreciated.

 

[Tourershine]

She can give you as much as she likes as long as she lives for 7 years afterwards. If she dies within the 7years, tax will be due on the “gift “ on a pro-rata basis.

Inheritance Tax

If as suggested above, the Mother in law is invoiced for the conversion, and she pays the bill, how does that work?
I know it's for works carried out on the Sons vehicle, but surely that's no different to a parent paying for say a conservatory, or a new heating system etc. Would tax still be due on this within the 7 years?

 

[Teesix]

That's the bit I'd like to understand.

 

[andys]

It's an interesting question, but to be honest I don't think a vehicle forum is the right place to seek advice like this, regardless of the fact a T6 is involved. I'd pay the money and go see an accountant so you can properly put your mind at rest.

 

[Ghost]

Look here ...

Inheritance Tax

Edit..
I can see now @Salty Spuds posted link above

 

[Salty Spuds]

If as suggested above, the Mother in law is invoiced for the conversion, and she pays the bill, how does that work?
I know it's for works carried out on the Sons vehicle, but surely that's no different to a parent paying for say a conservatory, or a new heating system etc. Would tax still be due on this within the 7 years?

Technically it’s still a gift, she owns the conversion aspect of the vehicle & that would be included in her estate, as would a heating system or conservatory. In reality the executors might not flag it when the estate goes into administration. It all depends on the size & complexity of the estate & if solicitors & accountants get involved.