Limit on parent help with student finance

Tue, 06 Sep 2011

Parents worried about helping their kids with their student finances might be interested in the latest advice from ICAEW.

The professional members association for chartered keywordaccountants noted that there is a limit to how much economic support parents can provide for their offspring without it being taxable.

SME and personal tax expert with the body Anita Monteith explained that it is wise to talk to a specialist as everyone's situation is different.

"The only tax issue on gifts is an inheritance tax one. Inheritance tax doesn't actually become a problem unless you have more than £325,000 to give away," she said.

"Even then if you live for a further seven years after making the gift, it is unlikely to be payable."

Ms Monteith added that if the donor's estate is worth more than the threshold then gifts of up to £3,000 per year can be made without incurring a levy.

However, this limit is per donor, meaning it would have to be split between their children.

In other news, the Chartered Institute of Taxation recently claimed that the government's initiative to encourage people to give more money to charity by offering inheritance tax breaks is flawed.
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