Gift from parent based in Northern Ireland (UK)

Good afternoon folks,

My father lives in Northern Ireland and has gifted me £10,000 primarily towards assisting me with saving for a house deposit here in the Republic. I still have a UK bank account up North with Ulster Bank. So my father transferred the money from his UK savings account into my UK current account where it currently resides. Should I now use something like TransferWise to send the money to my Irish bank account? This is how I originally moved my savings when I moved from Northern Ireland to the Republic since TransferWise was one of the cheapest methods. But I am seeking some advice on what is the best most tax-efficient way for me to legally inherit this gift from my father? HMRC in the UK are already aware that he has gifted the money to me as he declared it to the NI Pensions Centre when claiming Pension Credits.

PoundMan said:

Good afternoon folks,

My father lives in Northern Ireland and has gifted me £10,000 primarily towards assisting me with saving for a house deposit here in the Republic. I still have a UK bank account up North with Ulster Bank. So my father transferred the money from his UK savings account into my UK current account where it currently resides. Should I now use something like TransferWise to send the money to my Irish bank account?

Click to expand...

If that's the most cost effective way to convert £ to € then, yes. There are existing threads on ways to do currency exchanges at lowest cost that may be worth reading. But I suspect that Wise should be generally competitive.

PoundMan said:

But I am seeking some advice on what is the best most tax-efficient way for me to legally inherit this gift from my father?

Click to expand...

What tax issues do you have in mind? Unless this £10k brings you over the €335k group A threshold then Gift/Capital Acquisitions Tax shouldn't be an issue.

ClubMan said:

What tax issues do you have in mind? Unless this £10k brings you over the €335k group A threshold then Gift/Capital Acquisitions Tax shouldn't be an issue.

CAT groups and group thresholds

This page explains thresholds, rates and aggregation rules for calculating Capital Acquisitions Tax

www.revenue.ie

Click to expand...

I thought there was maybe something about a maximum allowance of €3,000 per year?

Or perhaps that €3,000 limit doesn't apply if the gift is from a parent as opposed to a friend for example?

There is indeed a small gift exemption limit of €3k, but the group A CAT threshold relevant to this situation is obviously much higher.

ClubMan said:

There is indeed a small gift exemption limit of €3k, but the group A CAT threshold relevant to this situation is obviously much higher.

Click to expand...

So does the group A CAT threshold take precedence over the small gift exemption limit? Or is it a case that I should only transfer €3,000 per year instead of the full £10,000 in one go?

I don't know about precedence, but since the £10k is over the small gift exemption threshold of €3k, it surely makes sense to use the CAT group A threshold to take the £10k tax free leaving €335k - £10k for future group A gifts/inheritances.

Maybe you could choose to pay gift tax on £10k - €3k if you wanted?

My understanding is that the main difference with the small gift exemption is that annual gifts of €3k or less do not accumulate and get deducted from the relevant CAT group thresholds.

You might want to check if any returns are required even if the gift is tax free.

PoundMan said:

So does the group A CAT threshold take precedence over the small gift exemption limit? Or is it a case that I should only transfer €3,000 per year instead of the full £10,000 in one go?

Click to expand...

Just so you realise the £10,000 has been "gifted" already - whether it's in your account here or in the UK makes no difference to Revenue. Transfer away!

It obviously depends if you’re going to inherit more than €335,000 down the line.

Alternatives would be for multiple people to gift multiple €3k’s to different people, e.g. mother and father give £10k/€12k to their daughter and son-in-law, or to gift €3k and lend the rest, and then write-off €3k each year for a few years.