Money transfer to a sibling

[jaguarsuk]

Sorry this is wrong. The 3000 limit is an overall total not per person.

I know this via my parents financial advisor

Okay, stand corrected.

[Diana M]

The deeds are in my name and I have a mortgage on the house now. He has no present or future legal rights on the property. I bought the house from my mum (she is still alive). There was a large outstanding mortgage which I had to pay off. Once bought, the property had 40k equity in it. As this 40k would have been our future inheritance, I agreed to give him 20k.

Is your Mum still living in the house?

Are you living in the house?

You say you bought the house but do you mean you paid the current market value for it or did you pay off/replace the existing mortgage and 'acquired' the existing £40k equity in the property (which you agreed to split with your brother eventually)?

If it was the latter then you need to take a step back to see if that would cause your Mum any problems in the future if she were to face assessment for care home fees and whether that transaction would be considered as a 'gift with reservation' if she were to continue to live in the property.

I'm not giving tax advice (only a qualified tax adviser can do that) but I'm a Mum who looked into this issue in relation to my daughter and my property.

Di

[Diana M]

There are also other ways around it.

If you have a partner and children you could give them £3K each and then they feeling very generous could give your brother £3K each.

I'm not sure that would be a way round it since the annual allowance is for "gifts".

If money is given to a third party (partner/children) with no intention of it being a gift for their benefit but solely for the purpose of providing a vehicle for the money en route to a brother then I'm not sure that's acceptable.

There's a fine line between legitimate tax avoidance and tax evasion.

Di

[Diana M]

The 3000 limit is an overall total not per person.

I know this via my parents financial advisor

I know that too for the same reason

It's explained here on the Government website > https://www.gov.uk/inheritance-tax/gifts

Di

[Diana M]

but am concerned about attracting negative attention or fees if I just do it as a bank transfer

I don't see why transferring money from your account would cause you a problem but a large sum of money being paid into your brother's account may attract the attention of his bank if this is an unusual occurrence.

Perhaps he should alert them in advance that the money will be arriving from a family member to avoid any money laundering questions.

The FCA advises banks to "know their customers" when it comes to any untypical financial transactions on their accounts.

Di

[PaulR986]

It is not clear whether you live in the house concerned.
If you do and it is your only or main residence (you can elect main) then no CGT will be payable when you sell it.
If you do not live their and there is no election you probably will be liable to CGT.
In either event you can give whatever you like away and this will not affect CGT.
IHT - as mentioned above - is a different matter.