Taxation on cash to UK resident

[X Paddy]

Greetings all. I've searched through several threads but cannot get a definitive answer to my situation so hopefully someone can help.

My sister lives in the UK (domiciled and resident for more than 25 years). She pays HMRC by the usual PAYE system there. I am an Irish domicile and resident.
She wishes to purchase a property and I wish to give her a gift of cash (in excess of the group B inheritance threshold band) and I am confused by the tax implications considering:
1. She has no obligation to Irish taxation (and Revenue state that CAT is the responsibility of the donee).
2. HMRC levy no taxation on cash gifts, whether originating within or from without the UK (but there are rules for UK originating gifts such as the 7 year rule to discourage the reduction in the value of a person's estate).

If there is a tax due, who pays it? How is it levied and on whom?

I understand that if I wish to leave anything in my will to my sister she would have to declare the gift at that time, but does she need to do that now?

Any guidance would be appreciated.
XP

 

[brenbrady]

Greetings all. I've searched through several threads but cannot get a definitive answer to my situation so hopefully someone can help.

My sister lives in the UK (domiciled and resident for more than 25 years). She pays HMRC by the usual PAYE system there. I am an Irish domicile and resident.
She wishes to purchase a property and I wish to give her a gift of cash (in excess of the group B inheritance threshold band) and I am confused by the tax implications considering:
1. She has no obligation to Irish taxation (and Revenue state that CAT is the responsibility of the donee).
2. HMRC levy no taxation on cash gifts, whether originating within or from without the UK (but there are rules for UK originating gifts such as the 7 year rule to discourage the reduction in the value of a person's estate).

If there is a tax due, who pays it? How is it levied and on whom?

I understand that if I wish to leave anything in my will to my sister she would have to declare the gift at that time, but does she need to do that now?

Any guidance would be appreciated.
XP

Hi, Irish CAT will apply where either the disponer or the disponee is resident in Ireland. So your sister would have a CAT liabiility on the cash in excess of the threshold.

 

[Greta]

You can try to reduce your sister's liability, if possible, by availing of 3000 euro per person per year exemption on gifts. What I mean is the first 3000 euro per year you gift to her is exempt from calculating her CAT liability, but if, for instance, she is married, you can also give her husband 3000 gift that he can pass to her. If you are married, you can give 6000 euro to your spouse, who can then gift 3000 to your sister and 3000 to her husband. If your parents are still alive, you can give them 3000 each, and they can pass it on to their daughter/your sister, etc.
Depending on when your sister needs the money, you can repeat this process next year.

It won't matter much if we are talking about a very large gift, but on more modest ones the saving on CAT can be considerable.

 

[mandelbrot]

You can try to reduce your sister's liability, if possible, by availing of 3000 euro per person per year exemption on gifts. What I mean is the first 3000 euro per year you gift to her is exempt from calculating her CAT liability, but if, for instance, she is married, you can also give her husband 3000 gift that he can pass to her. If you are married, you can give 6000 euro to your spouse, who can then gift 3000 to your sister and 3000 to her husband. If your parents are still alive, you can give them 3000 each, and they can pass it on to their daughter/your sister, etc.
Depending on when your sister needs the money, you can repeat this process next year.

It won't matter much if we are talking about a very large gift, but on more modest ones the saving on CAT can be considerable.

I'm not sure if that's good advice Greta; CAT wouldn't be my area of expertise but ([broken link removed]

19.16
Connected Gifts
Under section 8 CATCA 2003, gifts are deemed to come from the original disponer when they are gifted on within 3 years before or after the original gift. However, in cases where, for example, a gift (the first gift) is taken by a married child of the disponer and consists of a house or a site for a house and that child in raising a mortgage on that property finds that the lending institution as a requirement for the mortgage demands that the property is placed in the joint names of the spouses (the second gift), then provided adequate evidence is given that the transfer into the joint names is at the insistence of the lender and that the first gift was not made to enable or facilitate the making of the second gift Section 8(1) will not apply. Section 8(2) covers this situation and will also apply in all other cases where it can be shown to the satisfaction of the Revenue that such gifts are not so connected.