Old investment account in UK closed - send contents to family member? Gift?
#1
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Old investment account in UK closed - send contents to family member? Gift?
Since this forum seems to be one of the only places to get financial pointers from people who actually know... I have another question.
Before I left the UK, I was due to put a bunch of money in investments with Nationwide. I spoke to an advisor there. Then, you know what comes next... they informed me that since I was going to be a "US person", they would be severely limited in the amount they could put in. So, I took their advice and invested the max allowable.
Fast forward a few years, those old Nationwide investment accounts are now being handled by Aegon. They sent me the FACTA form in the mail after I'd updated my address to the US, and shortly after completing that, they let me know that I couldn't be a client/customer of theirs anymore, due to all the US red tape. So that money is no longer actively invested, but it's still with Aegon. The closing value was about £18,000. (Yes, it was reported via FBAR).
So here's the question: can I gift this out to family members in yearly instalments of £3,000 to avoid hitting the UK gift tax? (How Dickensian). Is there some kind of hidden gotcha I need to be aware of to avoid upsetting anyone on either side of the Atlantic?
Before I left the UK, I was due to put a bunch of money in investments with Nationwide. I spoke to an advisor there. Then, you know what comes next... they informed me that since I was going to be a "US person", they would be severely limited in the amount they could put in. So, I took their advice and invested the max allowable.
Fast forward a few years, those old Nationwide investment accounts are now being handled by Aegon. They sent me the FACTA form in the mail after I'd updated my address to the US, and shortly after completing that, they let me know that I couldn't be a client/customer of theirs anymore, due to all the US red tape. So that money is no longer actively invested, but it's still with Aegon. The closing value was about £18,000. (Yes, it was reported via FBAR).
So here's the question: can I gift this out to family members in yearly instalments of £3,000 to avoid hitting the UK gift tax? (How Dickensian). Is there some kind of hidden gotcha I need to be aware of to avoid upsetting anyone on either side of the Atlantic?
Last edited by Dmac_; Nov 28th 2022 at 12:17 pm.
#2
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Re: Old investment account in UK closed - send contents to family member? Gift?
Last edited by durham_lad; Nov 28th 2022 at 2:56 pm.
#3
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Re: Old investment account in UK closed - send contents to family member? Gift?
Interesting, thanks. How about the other way around, that is, a UK based person giving a US based person a gift? The threshold in the US seems to be much higher?
#4
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Re: Old investment account in UK closed - send contents to family member? Gift?
Agree with the above. No tax on gifts. But if you die within 7 years of the gift, all or a portion (depending when you die) will be included in your estate for inheritance tax purposes. It prevents someone elderly or with a terminal illness, for example, from avoiding inheritance tax by giving everything away.
Ronnie Corbett is another well-known person who took advantage of the 7-year rule. He and his wife sold their large home of 33 years and gave the proceeds to their children, moving to a much smaller bungalow nearby and living far beyond 7 years. Apparently they were very sad to give up their home, but wanted to avoid inheritance tax.
Ronnie Corbett is another well-known person who took advantage of the 7-year rule. He and his wife sold their large home of 33 years and gave the proceeds to their children, moving to a much smaller bungalow nearby and living far beyond 7 years. Apparently they were very sad to give up their home, but wanted to avoid inheritance tax.
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Re: Old investment account in UK closed - send contents to family member? Gift?
A US person can give up to $15k each to multiple individuals every year without reporting it, but above that it has to be reported using an IRS gift form and it goes against your lifetime allowance which is very large for most of us. If the UK based person happens to be a USC then I would think those rules might still apply but I don’t know and won’t need to know.
Last edited by durham_lad; Nov 28th 2022 at 4:58 pm.
#6
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Re: Old investment account in UK closed - send contents to family member? Gift?
I agree with durhamlad and tdrinker. On the US side you can now gift up to $16k this year and $17k next year without any reporting or tax owed. From the UK perspective, personally, for the amount in question, I’d gift $16k equivalent this year and the balance in January (which will all be in the same UK tax year, but spread over two tax years in the US) and be done with it if you’re in good health. Otherwise, I’d gift £3k each year until it’s gone is the safest bet, with the annoyance of having this loose end around to deal with for about six more years. You could also do something in between, such as gift it over 3 years, reducing the amount over £3k exposed to IHT if you were to pass away before the amounts are exempt.
Edit: it’s worth noting that you’d only be liable for any IHT if the UK considered you still domiciled there, but that’s a whole other discussion surrounding tax treaties, etc.
Edit: it’s worth noting that you’d only be liable for any IHT if the UK considered you still domiciled there, but that’s a whole other discussion surrounding tax treaties, etc.
Last edited by Expatrian; Nov 28th 2022 at 6:28 pm.
#7
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Re: Old investment account in UK closed - send contents to family member? Gift?
Thanks both, although I can say safely that me dying anytime soon would be a very unusual and unfortunate event.
But my question just above is actually about UK people gifting to US people. What are the rules regarding a British resident gifting money to a US resident?
But my question just above is actually about UK people gifting to US people. What are the rules regarding a British resident gifting money to a US resident?
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Re: Old investment account in UK closed - send contents to family member? Gift?
Last edited by Expatrian; Nov 28th 2022 at 6:39 pm.
#9
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Re: Old investment account in UK closed - send contents to family member? Gift?
For the sums you are talking about it is always the person giving the gift that is responsible for any taxes now or in the future. The US recipient has nothing at all to report, the UK person has the UK rules to follow.
Last edited by durham_lad; Nov 28th 2022 at 6:42 pm.