Capital gain or inheritance tax??

Hi,

If my living parents wants to transfer a large sum of money from abroad to me, do I have to pay capital gain or inheritance tax in the UK?

https://www.gov.uk/inheritance-tax/gifts

You haven’t made a capital gain unless you’ve invested and then cashed out.


Sent from my iPhone using Tapatalk

We have received inheritances transfered from the uk while we were living in the USA. No taxes due. We have also transferred lots of money from the USA to the uk since we got back and no taxes.

Hi,

If my living parents wants to transfer a large sum of money from abroad to me, do I have to pay capital gain or inheritance tax in the UK?

You'd need to file IRS form 3520 if pertinent to your situation

You'd need to file IRS form 3520 if pertinent to your situation

Good point.  If the gift from a foreign person exceeds $100k then it needs to be reported using form 3250, although I believe still no taxes due.

Since the OP is asking about living parents then they could each send a gift up to $100,000 with no need to report it. (Total of $200k)

https://www.irs.gov/instructions/i3520

Who Must File


4. You are a U.S. person who, during the current tax year, received either:
More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or

You can send hundreds of thousands, just needs reporting if over $100k. Anything under that doesn't need to be reported in this family example. Need to be mindful of failing foul of the lineage rules however. No tax to Uncle Sam, although checking in with HMRC would be wise
 

I am concerned more about the HMRC side.. Do I need to report anything if it is more than £325k?

I am concerned more about the HMRC side.. Do I need to report anything if it is more than £325k?

I don’t think so, inheritance taxes are paid out of the estate of the deceased and the recipients have no taxes to pay.

You'd need to be aware of the 7 year rule. Anything after 7 years is not counted for IHT. Anything before will be subject to their threshold, (sliding scale based on longevity), a joint £650,000. As you're talking rather large amounts here, an often free initial meeting with a solicitor would be the way to go, no question.

I believe the key issue is that the gift is coming from someone abroad. From my understanding, though I haven't looked at this recently, if the people making the gift aren't UK resident, then 7 year rule should be irrelevant and the entire amount is not taxable by the UK.

I believe the key issue is that the gift is coming from someone abroad. From my understanding, though I haven't looked at this recently, if the people making the gift aren't UK resident, then 7 year rule should be irrelevant and the entire amount is not taxable by the UK.

The OP asked if he was responsible for any HMRC taxes and the answer is no. Any taxes due are the responsibility of the giver.

You are quite right that the 7 year rule on gifting only applies to UK residents so the OP’s parents  can give gifts in accordance to the rules of the country that they are tax resident in.