What to do with some of your mums money!! -

[gingertom]

Here's a question

In the pub last night a mate informed me that his mum had given him £10,000 to look after as she was worried about having to much in one bank account - so he has stuck it in his - and I am convinced he will face the prospect of paying some form of tax on it - am I right?

[cjanderson]

course he will. he has interest so will get the tax deducted when its paid. Unless he completes a form to get it paid gross - IR86 or something.

hubbies and wives do this all the time, to make the interest in the lower tax paying spouses name. Course you have to trust that they will give the money back when the time is right :D

[Brozyniak]

I don't think tax on interest is what the op had in mind. If your friend's mum kicks the bucket any tme soon (within 7 years IRC) the inheritence tax with apply at 40% less gift allowances and taper relief.

But one would hope that is not pretty likely.

Income tax will not apply.

[splobber]

moving to finance

[teabag]

So why not stick some of it in an ISA?

[gingertom]

I don't think tax on interest is what the op had in mind. If your friend's mum kicks the bucket any tme soon (within 7 years IRC) the inheritence tax with apply at 40% less gift allowances and taper relief.

But one would hope that is not pretty likely.

Income tax will not apply.

Ah, this begins to make more sense - its only a temporary measure - she old - reads the newspapers, panic, takes out £10,000 - sticks it in a cupboard - and then panics again - hence my mate now having it in hso own account - which has b***er all in it normally as he's always in the pub :)
I thought that he having suddenly to all intense and purposes would be liable to some form of tax just by having ti in his account and not having earned it?

I think she has some other money stuffed into a ISA - but am not sure

[Brozyniak]

You give all you want to folks and no tax will apply. Mr Taxguy gets a bit upset though if you are doing this to circumvent inheritance tax though and hence the 7 year rule before death. I don't think that this has changed since I did my exams many years ago.

Blowing it all down the pub and it's going on duty ;)

[gingertom]

Ah, this begins to make more sense - its only a temporary measure - she old - reads the newspapers, panic, takes out £10,000 - sticks it in a cupboard - and then panics again - hence my mate now having it in hso own account - which has b***er all in it normally as he's always in the pub :)
I thought that he having suddenly to all intense and purposes would be liable to some form of tax just by having ti in his account and not having earned it?

I think she has some other money stuffed into a ISA - but am not sure

Arse - :thinking: looks like I have lost my bet!! That's another pint i will owe him - I ad heard that if you made a deposit over £1000 then the banks building societies would notify the inland revenue?

[Remains]

The 7 year rule actually works by reducing the tax by a seventh each year I think. So after 7 years there is no tax left to pay.

Pretty sure that's what happens as my dad signed over their holiday home to me a couple of years ago.

Remember as well that the nil-rate for IHT is around the £300k mark too.

Info all on <a href="http://www.guardian.co.uk/money/2007/oct/10/writingawill.factsheets">this page</a>.

[farmroad38]

Arse - :thinking: looks like I have lost my bet!! That's another pint i will owe him - I ad heard that if you made a deposit over £1000 then the banks building societies would notify the inland revenue?

Never heard that before - if they did that, they'd be telling them about thousands of transactions a day surely?

[Baz]

Never heard that before - if they did that, they'd be telling them about thousands of transactions a day surely?

More like £10,000 deposits in cash. Its an anti money laundering rule and does exist.

So if you sell your car for £10,000 cash and pay it into your bank a money laundering report will wing its way to the crime office, or whatever they call it these days.

[gingertom]

More like £10,000 deposits in cash. Its an anti money laundering rule and does exist.

So if you sell your car for £10,000 cash and pay it into your bank a money laundering report will wing its way to the crime office, or whatever they call it these days.

Oh, might be back onto winning my pint - it was cash - old people keep cash in the weirdest of places - so he could be on dodgy ground!!

[Baz]

Oh, might be back onto winning my pint - it was cash - old people keep cash in the weirdest of places - so he could be on dodgy ground!!

Nope not dodgy, as long as he hasn't stolen it or raised it from drug running etc. Even the legit transactions get a report sent in.

Its just to help the crime office build a picture and see if any trends come in. Loads of people have to send in reports, solicitors, accountants, banks, car dealers etc etc. If they get a report from an accountant of some dodgy transaction and then another from the bank and the police already have suspicions of drug dealing etc then it builds up a case that something may be going on.

Just the act of paying in a large sum of cash won't put anyone on dodgy ground, but a money laundering report will go in though nevertheless.

So you're still losing your bet sorry.

[gingertom]

Nope not dodgy, as long as he hasn't stolen it or raised it from drug running etc. Even the legit transactions get a report sent in.

Its just to help the crime office build a picture and see if any trends come in. Loads of people have to send in reports, solicitors, accountants, banks, car dealers etc etc. If they get a report from an accountant of some dodgy transaction and then another from the bank and the police already have suspicions of drug dealing etc then it builds up a case that something may be going on.

Just the act of paying in a large sum of cash won't put anyone on dodgy ground, but a money laundering report will go in though nevertheless.

So you're still losing your bet sorry.

HAHA - don't think its drug money!! Thx guys

[friedeggbutty]

The 7 year rule actually works by reducing the tax by a seventh each year I think. So after 7 years there is no tax left to pay.

Pretty sure that's what happens as my dad signed over their holiday home to me a couple of years ago.

Remember as well that the nil-rate for IHT is around the £300k mark too.

Info all on <a href="http://www.guardian.co.uk/money/2007/oct/10/writingawill.factsheets">this page</a>.

Not quite. For the first 3 years it makes no difference i.e. if the donor dies within 3 years of making the gift then the full 40% inheritance tax is payable assuming the estate is above the nil rate band (currently £312k).

If the donor dies more than 3 years after making the gift then any IHT due is reduced by 20% for each year. So if the IHT would initially have been £100 then it would become £80 if the donor dies aftermore than 3 years, £60 after more than 4 years and so until it becomes nil after 7 years.