Tax implications of giving my daughter some cash I inherited

M

Macfross

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I have inherited some money from a cousin in the UK (N. Ireland) on which I will pay 33% after allowable deduction. I wish to share it with my daughter. Will she be liable for an additional 33% on any amount I give to her? We have a joint account. If I have the money deposited in that and we both draw down on it, is that a permissible way to avoid double payment of CGT? Could I ask the solicitor to pay an amount directly to her so she pays tax on what she receives and I pay tax on what I receive minus my gift to her?
 
You can gift or leave up to €335k to your daughter before she has to pay Capital Acquisitions Tax - assuming her mother hasn't gifted her or left her any money.

You and your wife can each gift her up to €3,000 a year without it affecting the CAT Threshold.

Brendan
 
Brendan Burgess said:
You can gift or leave up to €335k to your daughter before she has to pay Capital Acquisitions Tax - assuming her mother hasn't gifted her or left her any money.

You and your wife can each gift her up to €3,000 a year without it affecting the CAT Threshold.

Brendan
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Does that mean that if I give her, say 20,000 from the inheritance she will be liable to pay tax on 17,000 now or does she not pay the CAT now but waits til she inherits from me on my death and adds 20,000 onto my final estate amount?
 
Macfross said:
Does that mean that if I give her, say 20,000 from the inheritance she will be liable to pay tax on 17,000 now or does she not pay the CAT now but waits til she inherits from me on my death and adds 20,000 onto my final estate amount?
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The latter - outside of the 3k per year you/her mother (ie the sum of anything from you both) can give her 335000 tax free whilst you are alive or dead. After that, she's taxed. Have you checked if any UK inheritance tax was paid on the cousins estate - there's a tax agreement between UK and Ireland that might avoid some of what you think is due. I don't understand it well enough to give you a definitive answer but its worth looking at.
 
If you want to give her €20,000

1) You can give your wife as much as you like without any CAT implications.
2) You can give your daughter €3k this year
3) Your wife can give your daughter €3k this year
4) Repeat as necessary

If your daughter needs €20k now, I think it's ok to lend her the €14k. And she can pay back €6k next year. Not sure if that is pushing beyond the limit from tax planning to tax evasion.

When you and your wife die, if your daughter is unlikely to receive over €335k , then none of this matters. Just give her the €20k now.

Brendan
 
Brendan Burgess said:
If you want to give her €20,000

1) You can give your wife as much as you like without any CAT implications.
2) You can give your daughter €3k this year
3) Your wife can give your daughter €3k this year
4) Repeat as necessary

If your daughter needs €20k now, I think it's ok to lend her the €14k. And she can pay back €6k next year. Not sure if that is pushing beyond the limit from tax planning to tax evasion.

When you and your wife die, if your daughter is unlikely to receive over €335k , then none of this matters. Just give her the €20k now.

Brendan
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I think my cousin's estate will be below the 350,000 sterling point when tax is due - primarily because the price of housing in Northern Ireland is much lower than elsewhere so I don't think tax will be paid on his estate.
My estate may or may not exceed 335,000 depending on how house prices rise here in rural Ireland and/or any increase in the inheritance threshold, so I may as well take my chances. My daughter doesn't need the money, I just want her to benefit from my windfall as I am a widow and she is my only child.
Thanks for your advice and helping to keep me on the straight and narrow.
Frankie
 
P.S. As I haven't given my daughter the allowable tax-free 3000 annual gifts, can I backdate payments, say for the past 5 years and give her 15,000 now or perhaps give her 5000 for the next 3 years?
 
Macfross said:
P.S. As I haven't given my daughter the allowable tax-free 3000 annual gifts, can I backdate payments, say for the past 5 years and give her 15,000 now or perhaps give her 5000 for the next 3 years?
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No. You can't backdate the Capital Acquisitions Tax Small Gift Exemption and it's strictly €3k p.a. with any amount in excess of that assessable for CAT.

Small Gift Exemption

Exemption from CAT on small gifts
www.revenue.ie www.revenue.ie
 
Brendan Burgess said:
Then just pay her €3,000 a year until she needs it.
And then give her what she needs when she needs it.

Brendan
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You only need to care about the 3K gift allowance if the proceeds of YOUR estate when you die, divided by children will be 80% of 335,000 CAT threshold.

e.g. my fathers estated divided 6 ways will shortly give each sibling ~60K. He gave me 140k for house deposit in 2014.
Since 60K+140K is far less than 80% of 335,000 euro limit, we wont/didnt/never will be informing Revenue, since <80% is none of their business.
 
Hi Fidel

What is the 80%? Is that the figure which requires the Executor to notify Revenue of the bequest?

Brendan
 
Brendan Burgess said:
If you want to give her €20,000

1) You can give your wife as much as you like without any CAT implications.
2) You can give your daughter €3k this year
3) Your wife can give your daughter €3k this year
4) Repeat as necessary

If your daughter needs €20k now, I think it's ok to lend her the €14k. And she can pay back €6k next year. Not sure if that is pushing beyond the limit from tax planning to tax evasion.

When you and your wife die, if your daughter is unlikely to receive over €335k , then none of this matters. Just give her the €20k now.

Brendan
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Theoretically the notional interest (at commercial rates) would be viewed as an additional gift to the daughter and push her over the 3k/6k threshold
 
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