Small Gift Exemption Query

T

TurningGreen

Registered User
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Hi All,

Anybody able to answer this question

I am thinking of giving each of my children 3K for the next 3 years but I want them to try hold for those 3 years, giving them a help with a house deposit, car or a nice holiday at the end. Question I have is this - does the money have to go into a financial account (bank, credit union etc) or can I purchase Prize Bonds or State Savings Certs in their names and hand them their bonds/certs in 3 years to do what they wish. Since bank interest rates are so low, I kind of like the idea of prize bonds in the hope that maybe they might have a win - I know odds of a win are extremely low but live in hope and optimism !!.

Thanks
 
You can give the 3K in any which way you want (cash, bank, PBs, shares) but you can't control what they do with it afterwards. Shares and PBs might be easier to leave untouched but unless you hold the certs they can encash them anytime. Either way you would need their details, e.g. PPS numbers, to set everything up properly - unless you go with cash.
 
TurningGreen said:
I am thinking of giving each of my children 3K for the next 3 years but I want them to try hold for those 3 years, giving them a help with a house deposit, car or a nice holiday at the end.
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Why are you specifying any conditions at all? They sound like young adults, so may not appreciate the lesson. You could put away the money yourself and just give it to them in three years. Or give them an interest free loan when they need the money and write it off using their gift exemption of the following three years.
 
Sorry to hijack,
Itchy it’s tax compliant to give your kids an interest free loan and then write it off by 3k a year? Would this need to be documented?
Thanks
 
Interest free to them. Interest has to be at "market rate". Plenty of info if you use the search.
 
Are any of the children under 18?
If yes, then you may need to look at something like bare trust, trust, or something like this (other providers and similar products exist)

Child Savings Account | Saving For Children's Future | Zurich

Child Savings Plus from Zurich is a child Regular Savings Plan suitable for parents or god-parents who want to save for their children's future.
www.zurich.ie www.zurich.ie
 
Itchy said:
You could put away the money yourself and just give it to them in three years.
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Then you would be giving them €9k after 3 years......Would this look like a once off gift of €9k with the first €3k tax free? Better to give them €3k each year.
 
Pinky22 said:
Itchy it’s tax compliant to give your kids an interest free loan and then write it off by 3k a year? Would this need to be documented?
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That's an interesting question.

We have already given one of our children an interest free loan towards his mortgage.

How can we gift him the €3k each year off this loan.

Let's say he owes us €100k and is paying us back €10k per annum. So after year one, he owes us €90k. So, we say to him at the start of year two, instead of you owing us €90k now, we are gifting you €3k, so you only owe us €87k...
or
Could we just knock 10 x €3k off the loan up front? His loan becomes €70k repayable over 10 years rather than a €100k loan....
 
You have to look at it each year.

It’s also €6k a year because you refer to “us”/“we”.

i.e. you and your spouse could choose to write-off €6k each year.

Or €12k if the loan was to a child and his or her spouse.

All on the basis that it’s €3k per person. So Mum and Dad can give €12k to their son and daughter-in-law. Or write-off €12k in respect of a loan.
 
Just to clarify in order to gift the 3K a year to a child under the small gift exemption can you just give him a cheque yearly or do you need to document the gift some way for Revenue purposes? Also can you backdate the gift a few years i.e. give 12 k for the last 4 years (2017-2021).
 
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