HMRC issues warning over siblings who've gifted each other money

HMRC has clarified rules around siblings gifting each other money amid the Cost of Living crisis. HMRC, which is now operating under the Labour Party government, spoke out after a taxpayer got in touch with the customer service social media account via X.

They queried: "Do I have to declare in the tax return? Or this money will be considered as tax free after seven years?" HMRC said in response: "There is no limit to how much cash you receive as a gift for income tax purposes as long as it's not related to employment."

The taxpayer explained: "My brother has given me £100,000 as a gift." Inheritance Tax may have to be paid after your death on some gifts you’ve given. Gifts given less than 7 years before you die may be taxed depending on: who you give the gift to and their relationship to you, the value of the gift and when the gift was given.

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Gifts include money, household and personal goods, for example, furniture, jewellery or antiques, a house, land or buildings, stocks and shares listed on the London Stock Exchange and unlisted shares you held for less than 2 years before your death.

A gift can also include any money you lose when you sell something for less than it’s worth. For example, if you sell your house to your child for less than its market value, the difference in value counts as a gift. Anything you leave in your will does not count as a gift but is part of your estate. Your estate is all your money, property and possessions left when you die.

The value of your estate will be used to work out if Inheritance Tax needs to be paid. Some gifts are exempt from Inheritance Tax. There’s no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently and are legally married or in a civil partnership with you.