485. Income tax on money gifted

to UK Citizen from India

Question: Dear Sir, Is money sent to my sister, a UK citizen, by me from India, taxable in the hands of my sister in UK? Regards Mr. Udayan Kumar Answer: Gifts are not subject to income tax in the United Kingdom. Sometimes people get confused between gift and inheritance. If you were to say gift money to your sister, say £25,000, your sister would not be subject to any income tax on this amount. However, any interest money she receives when she deposits this money in the bank, naturally will be taxable according to her income and tax free income allowance when she files her tax return. While it does not apply in your case, for the benefit of other readers, inheritance tax in UK comes into play if the estate is worth more than the Inheritance Tax threshold - £325,000 for the 2012-13 tax year. For those who wish to get more information on this topic, here is a link to HM Revenue & Customs website.