Tax question for accountants...

[DovertheRoad]

How much cash can you gift to a friend without incurring a tax penalty on either side?

[Seabag]

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/

[Mick Mac]

A gift is a gift. No income tax or capital gains tax implications. Provided you survive any cash gift by 7 years no iht implications either so a man of your age should not worry. You can Google the iht exempt amounts for gifts out of income but any amount is exempt anyway assuming you are not dead in 7 years.

[PeckhamNicola]

How would tax officials ever find out about gifts made in the last 7 years of the average person's life? Always been a bit curious about this. Well, on and off.

[Salsaboy]

They know about everything. They're watching you even now.....

PeckhamNicola Wrote:

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> How would tax officials ever find out about gifts

> made in the last 7 years of the average person's

> life? Always been a bit curious about this. Well,

> on and off.

[Alan Medic]

Another question someone might be able to answer. If a person earns a small amount of money (nowhere near the tax allowance)working for themselves, do they have to register as self employed? It seems like a pointless exercise. From what I read you do if you should be paying tax. But what if you wouldn't earn enough to pay tax?

[Angelina]

http://www.brighton-accountants.com/blog/tax-self-employment-still-employed/

if it's under the Personal Allowance ?10k then, no - it would be classed / argued as casual income

[DovertheRoad]

Thanks but this is the issue...lots of stuff online saying it's ?3k max or there are implications...without saying what these are...then others saying its effectively a capital gain so its up to the CGT limit of ?11k ish or CGT applies..then as per Mick some saying none at all. The sum in question is a fair bit higher than that

I'll check with a bean counter....thanks though.

[Alan Medic]

Thanks Angelina. It does seem a bit of a grey area though. However, casual income sounds good to me.

[Help-Ma-Boab]

I'd be happy with ?3k if that helps in any way?

DovertheRoad Wrote:

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> Thanks but this is the issue...lots of stuff

> online saying it's ?3k max or there are

> implications...without saying what these

> are...then others saying its effectively a capital

> gain so its up to the CGT limit of ?11k ish or CGT

> applies..then as per Mick some saying none at all.

> The sum in question is a fair bit higher than

> that

>

> I'll check with a bean counter....thanks though.

[dbboy]

If you are self employed (even more important if you are a cash business, so all your income is cash, rather than cheque, BACS or CHAPS payments), you will need to maintain some level of accounting, allowing you to you know what your income and expenditure is, so that you can determine any level of profit you make. Using this information will make completing and submitting your tax self assessment form to HMRC much simpler. Being registered you won't get any unwelcome surprises i.e. a tax investigation.

Ran a micro/small business for 10 years.

[Alan Medic]

Sure ddboy. But what's the point if net income is so little no tax would be due? All the income is recorded in a paypal account. What's likely to start a tax investigation? They must have better things to do.

[dbboy]

Agreed no tax may be due, but better to be registered than not

[Salsaboy]

Anything! Could be mistakes in your tax forms, a sudden change in your income, the inspector just having a bad day. Yes they have got better things to do but they like the small business owner as they are more likely to cave in and not fight anything.

Alan Medic Wrote:

-------------------------------------------------------

> What's likely to

> start a tax investigation? They must have better

> things to do.

[Mick Mac]

DovertheRoad Wrote:

-------------------------------------------------------

> Thanks but this is the issue...lots of stuff

> online saying it's ?3k max or there are

> implications...without saying what these

> are...then others saying its effectively a capital

> gain so its up to the CGT limit of ?11k ish or CGT

> applies..then as per Mick some saying none at all.

> The sum in question is a fair bit higher than

> that

>

> I'll check with a bean counter....thanks though.

I thought my post was clear.... For any gift amount, survive 7 years and you don't have to worry, it falls out of your estate. The "implications" are if you don't survive 7 years - if so it comes within your estate, on a taper basis. The 3k is the IHT annual exemption but assuming a bigger amount you need to consider the 7 years.