Need it as a bridge loan to buy a house but bank doesn’t like the loan idea and said it has to be a gift which obviously triggers the inheritance. It’s my wife parents
Did it count towards the 335k inheritance alllowance?The bank insisted that the parents write a letter saying it's a gift, and that the parents get legal advice and some sort of deed.
It wasn't a gift, I paid them back within six months.
No. Because it was a loan.Did it count towards the 335k inheritance alllowance?
Wow, sounds complex and difficult for the average joe and you would have to pay solicitors fees aswell to arrange that, I assume.What I have seen done is parents signing the bank declaration that a transfer is a gift and then separately executing a document confirming that the bank declaration is nonsense and a loan and only in existence because the bank insisted on it.
Not really. You just need some kind of document saying the dates, parties, and sums involved which is signed by all (ideally witnessed too). Then you have to keep a record of loan and repayment transactions via bank transfer.Wow, sounds complex and difficult for the average joe and you would have to pay solicitors fees aswell to arrange that, I assume.
This is an issue which pops up regularly, and the most common solution (saying one thing to the bank and something different to Revenue) seems to be commonplace. However, some clients are (understandably) uncomfortable with this. For those who like to be strictly compliant, the solution we have adopted when achievable ( which is not perfect, but is more in keeping with the strict rules)- is as follows:
a. Dad gives gift to child.
b. Within 3 years, child gives gift to Mother
c. This triggers application of gift-splitting rule and gift from Dad is now deemed to be a (fully exempt) gift to his spouse
d If three years is not long enough, rinse and repeat.
Offered on an fwiw basis and (as always) if in doubt seek advice specific to your situation.
The particular scenario addressed is that if an advance (which was always really a loan - but has been sworn to be a gift) is being repaid, it can be 'repaid' with a further gift - not to the original person but to their spouse.Where does the child get the cash to make the gift to the mother?
This is an issue which pops up regularly, and the most common solution (saying one thing to the bank and something different to Revenue) seems to be commonplace. However, some clients are (understandably) uncomfortable with this. For those who like to be strictly compliant, the solution we have adopted when achievable ( which is not perfect, but is more in keeping with the strict rules)- is as follows:
a. Dad gives gift to child.
b. Within 3 years, child gives gift to Mother
c. This triggers application of gift-splitting rule and gift from Dad is now deemed to be a (fully exempt) gift to his spouse
d If three years is not long enough, rinse and repeat.
Offered on an fwiw basis and (as always) if in doubt seek advice specific to your situation.
The particular scenario addressed is that if an advance (which was always really a loan - but has been sworn to be a gift) is being repaid, it can be 'repaid' with a further gift - not to the original person but to their spouse.
Now, instead of two separate 'gift' transactions, you have two transactions which the gift-splitting rules say must be treated a particular way.
You are saying most people take the gift, tell the bank it's a gift and then tell revenue it was a loan and how do they prove the paid it back?An interesting approach. Though I rarely hear of scenarios where the loan is repaid at all, and almost never of cases where the borrower would have the means to repay the loan so soon.
You are saying most people take the gift, tell the bank it's a gift and then tell revenue it was a loan and how do they prove the paid it back?
If they can't prove they paid it back, then is should come off the inheritance allowance is that not right?