Gift to a niece in the UK

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Donal55

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Would anyone on this site, who knows more about gift tax laws, be able to help me with a question? I have a niece who moved to the UK some years ago and is now buying a flat over there. I want to send her some money as a gift to help with the purchase. But at the same time I don’t want to eat into her Irish inheritance tax allowance as a niece because I know that a more elderly relative plans to leave her a sum in her will that would take her over this once off threshold of €32,500.

Therefore I was thinking of a making her a small financial gift next week before Christmas, making her another gift in Jan 2021 and then a final gift in Jan 2022, all paid into her Irish bank account and all below €3,000 which keeps it within the Irish annual gift tax limit, as I don’t know if her long term home will be in Ireland or the UK.

However presumably if she moves this money into her UK bank to help with the property purchase, then it will become caught up in the UK gift tax laws, which I know nothing about. I have tried reading up on them online but I find it a bit confusing. The impression I get (and I may be wrong) is that if I gift her a sum of money (I don’t know what the limit is) and if I live for seven years after the gift is made, then this gift is tax free but if I die within next seven years then she needs to pay tax on it.

Does anyone know if this is correct (which means that I could pay her the gift as one lump sum)?
Should I just ignore the Irish gift thresholds, if dealing with an Irish citizen currently resident abroad, or does the fact that the money is coming from this country mean that some of the rules relating to Ireland still apply.

Because the gift may straddle two very different tax systems (and she could move back to Ireland and would need to declare previous gifts above €3,000) I’m slightly unclear as how to best help her. Any informed advice would be welcomed. Thanks in advance.
 
I don't know about the UK tax liability, but I suspect it will be low or minimal. You are right about the 3k pa keeping it out of the Irish lifetime limit which she might well get caught by if she moves back here or otherwise comes within the clutches of Revenue. If you are married, your spouse can also avail of the 3k allowance, giving you a combined facility for transferring 6k per tax year. And of course if your niece is married and/or has a trustworthy partner, you (and your spouse) can each donate 3k pa to both of them, for a total of 12k tax free transfer pa. If you're minded to do so of course. In which case, she's a lucky girl to have such a generous uncle!
 
Hi Donal55,

Gifts are not taxable in the UK once the donor lives at least 7 years.

But their system is completely different anyway in that it taxes the estate of the deceased, not the beneficiary as is the case in Ireland.

You can obviously do €3k now, €3k in January, and €3k in January 2021.

Or, if you’re part of a couple and the beneficary is too, you could do €12k in each instance.

Or if she needs the money upfront, you could lend it all to her and then write-off the balance over the above time period.
 
Last edited:
Gordon Gekko said:
Hi Donal55,

Gifts are not taxable in the UK once the donor lives at least 7 years.

But they’re system is completely different anyway in that it taxes the estate of the deceased, not the beneficiary as is the case in Ireland.

You can obviously do €3k now, €3k in January, and €3k in January 2021.

Or, if you’re part of a couple and the beneficary is too, you could do €12k in each instance.

Or if she needs the money upfront, you could lend it all to her and then write-off the balance over the above time period.
Click to expand...

Hi Gordon,

Thanks indeed for the advice which is as pertinent and succinct as the advice you always give here. I think that what had me confused was how the advice online re taxation in the two jurisdictions is written, but your point about the estate of the deceased being taxed in the UK, while it is the beneficiary who pays the tax in Ireland clears the different wordings.

Based on this could I trouble you, or someone else, to clear up two final points?

1: If I want to gift her this money in a once off sum to help with the property deposit, would I be right in thinking that even if I die within the next seven years it will make no difference taxation wise, provide she stays in Britain, as she is not the person taxed on it, and as my estate won’t be taxed for me having made a past gift, because my probate will be done under Irish law?

2: I was keeping it very simple (under the €3,000 threshold) in case she moves back to Ireland. Unfortunately as I am widowed I can’t double this. But you mention being able “to write off the balance” over time. So if I gave her, say, €12,000 in a lump sum now - €3,000 as a gift and €9,000 as a loan, could I then simply, over time, write off this €9,000 loan by treating it as three tax-free gifts of €3,000 each, on the first of Jan for the few two years, without any monies actually needing to go back and forth except for this first once off gift/loan lump sum. Or does the €3,000 need to physically move through a bank account each year.

Thanks for your time and help.
 
Baby boomer said:
I don't know about the UK tax liability, but I suspect it will be low or minimal. You are right about the 3k pa keeping it out of the Irish lifetime limit which she might well get caught by if she moves back here or otherwise comes within the clutches of Revenue. If you are married, your spouse can also avail of the 3k allowance, giving you a combined facility for transferring 6k per tax year. And of course if your niece is married and/or has a trustworthy partner, you (and your spouse) can each donate 3k pa to both of them, for a total of 12k tax free transfer pa. If you're minded to do so of course. In which case, she's a lucky girl to have such a generous uncle!
Click to expand...
Hi Baby Boomer, thanks indeed for the wise advice. Cheers
 
Donal55 said:
1: If I want to gift her this money in a once off sum to help with the property deposit, would I be right in thinking that even if I die within the next seven years it will make no difference taxation wise, provide she stays in Britain, as she is not the person taxed on it, and as my estate won’t be taxed for me having made a past gift, because my probate will be done under Irish law?

2: I was keeping it very simple (under the €3,000 threshold) in case she moves back to Ireland. Unfortunately as I am widowed I can’t double this. But you mention being able “to write off the balance” over time. So if I gave her, say, €12,000 in a lump sum now - €3,000 as a gift and €9,000 as a loan, could I then simply, over time, write off this €9,000 loan by treating it as three tax-free gifts of €3,000 each, on the first of Jan for the few two years, without any monies actually needing to go back and forth except for this first once off gift/loan lump sum. Or does the €3,000 need to physically move through a bank account each year
Click to expand...

Hi Donal55,

You are effectively a “non person” from a UK Inheritance Tax (“IHT”) perspective, so you’re absolutely right, if God forbid something happens to you over the next seven years, it won’t trigger a UK tax issue.

I would send her two amounts now, €9k and €3k. The €3k is a gift, the €9k is a loan. I’d documents the loan properly as being repayable on demand and interest-free. Then I’d write-off €3k in January, another €3k in January 2022, and another €3k in January 2023.
 
Gordon Gekko said:
Hi Donal55,

You are effectively a “non person” from a UK Inheritance Tax (“IHT”) perspective, so you’re absolutely right, if God forbid something happens to you over the next seven years, it won’t trigger a UK tax issue.

I would send her two amounts now, €9k and €3k. The €3k is a gift, the €9k is a loan. I’d documents the loan properly as being repayable on demand and interest-free. Then I’d write-off €3k in January, another €3k in January 2022, and another €3k in January 2023.
Click to expand...
Sound advice all round. Thanks indeed.
 
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