Tax on lottery winnings "gifts"?

Yep, it's a potentially excempt transfer for IHT purposes.

And tax-wise, that is all.

Because there isn't any tax liability

Because, if it were necessary, it would be fraud and most people tend to avoid doing this. They are IMHO even less likely to do so to avoid paying some tax on money that they never actually expected to have.

tim

In message , JohnB writes

Your mate is right. Without a pre-drawn agreement your share would be regarded as a Potentially Exempt Transfer and if your mum died within 7 years you would have some tax to pay on the bit that exceeded the threshold for IHT, currently £263k, although the amount of tax due reduces after the third year.

Draw up a simple agreement now saying that the weekly bet is a joint bet, both sign it, then post it by recorded delivery to somebody else in a sealed envelope and tell them not to open it.

Retrospective stuff wont work.

The National Lottery site has info and a template for syndicates re all of this.

Hope this helps,

John.

Of course it would work.

How about before she informed Camelot of her winnings she told her son to be in on it with her that they played the lottery together. When they both turn up to claim the prize what are camelot going to do turn around and say unless you have a written agreement that you play together only one can claim the prize?

In message , Jane Tweedynn writes

What's Camelot got to do with it?

Its the Capital Taxes Office who you need top convince.

All you do is to get Camelot to pay the winnings in equal shares. If the money never went into the mothers bank how are the tax office ever going to know.

In message , Jane Tweedynn writes

This, of course, does not alter the fact that the winner is a single person. But if there was a legitimate prior dated document which Camelot can agee to recognise, such as their own suggested wording, then it could be held that there were joint winners with the entrant acting as trustee.

Most IHT returns arent examined, but most large ones are. Individuals with a few million lying around get investigated and seven years records are asked for. A large credit would need documentary evidence of its source. And, of course, to fraudulently complete the appropriate IHT forms is a criminal offence.

The issue has been litigated time and time again in the USA. Hardly valid law in England, but the reasoning of the American judges is persuasive. You can find appellate cases for the past 5 years or so for free at lexisone.com (free registration required)

I can't see that any amount of reasoning by an American judge is going to have any effect on the law in England.

The law is simple. If there was a prior agreement to share the money, it is not a gift. If there was no such *prior* agreement then it is a gift and is a PET.

There is the issue of whether the existance of the agreement is provable but this is an issue of fact (that will differ from case to case), not one of law.

I suppose that there is the problem of whether the agreement is enforcable by the second party. But if the first party doesn't contest this point, the revenue aren't going to win by challenging it. Evidence of the intention of the parties is paramount and if the money is actually split then they'd have difficulty showing that this wasn't the intention, even if the documentation is faulty.

tim

Common law jurists think alike. I have been doing some research on the citation of American cases by the Canadian Supreme Court and the House of Lords. (Unfortunately, the U.S. Supreme Court these days is too arrogant to reciprocate in any but the rarest of cases; the sainted Professor Joseph Story being long dead and nobody after him being so conversant in comparative law.)

The thinking is, as I said, the same. The cases instructive. That is the sole reason for mentioning it. If you think that foreign legal thought has no impact in England you should attend one of the conferences that BIICL puts on, and that (the major ones anyway) are frequented by Law Lords.

But who's to say whether the gift consisted of the winnings or the stake? "I gifted him 50p of this £1 lottery ticket which I bought on both our behalves -- the taxman is welcome to the extra 20p IHT on this 50p gift".