How much money can we give our daughter without paying tax?

We are Swedish citizens residing in Stockholm. Our daughter has been working in London since 2002. She plans to buy a flat and we would like to help her. How much can we gift her so she does not have to pay tax? Can she borrow more money from us should she need more?

David Denton, international tax expert at Quilter International, says transferring wealth within a family, in lifetime or upon death, often comes with a tax consequence. What this is will depend on the situation that the donor (or deceased) and recipient find themselves in, regarding their respective tax residence, and sometimes their domicile.

In 2002, when your daughter arrived in London, inheritance and gift taxes were a feature of the Swedish tax landscape, but at the end of 2004, the Swedish Riksdag, or Parliament, voted to repeal both, effective from 2005. So, fortunately for your daughter, gifts no longer give rise to taxation in Sweden. 

But how about in the UK system? While many European countries have civil law legal systems, which typically tax the recipient of a gift, the English common law system doesn’t. This means whatever is transferred is fully your daughter’s to use, without any obligation to report or be taxed in the UK.

David Denton, international tax expert at Quilter International
David Denton, Quilter International

However, to complete the story, it’s worth noting your daughter is likely to have become “deemed domicile” in the UK, having been resident for more than 15 out of the past 20 tax years. The consequence of this is that upon her eventual demise, her worldwide estate (other than any available reliefs and exemptions) will be subject to UK inheritance tax, including what has been given to her by you (unless, in the meantime, the UK follows Sweden in reforming its gift and inheritance tax regime).

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UK IHT is a fiendishly complicated subject, so good financial advice can go a long way and help someone avoid any pitfalls. While many consider that reform is likely, outright abolition is not.

So, would a loan rather than a gift alleviate this? If the terms of the loan to your daughter were that the loan would be repayable should she predecease you, then in theory, yes. However, since 2017, loans which are used to purchase residential property do not act in this way, and therefore would not effectively be excluded from UK IHT. However, loans to your daughter for other reasons could reduce the value of her estate, in the unlikely event that she dies before you.

I run a medium-sized marketing agency and strongly suspect that an employee has defrauded the business over several years by running a number of expenses through the company. This only came to light during lockdown when we began to question some very large marketing expenses that couldn’t have been incurred with restaurants and other venues closed. The police are not interested and I need the money back. What should I do next?

Dan Dodman, a partner in the dispute resolution team at law firm Goodman Derrick, says you should first try to get a clear picture of how the fraud has been committed. This investigation process is a delicate one and care should be taken not to alert the employee to your suspicions.

Consideration also needs to be given as to how to protect the business while also avoiding tipping off the fraudster. Does the fraudster have access to any other methods of committing fraud beyond making false expenses, such as access to client money? If so, this should be cut quickly in a manner that does not reveal that an investigation is ongoing, perhaps with the introduction of new procedures. Also consider whether the fraudster might have any accomplices across the business. 

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Make sure that emails are obtained and backed up, and talk to your IT team as to the restoration of deleted emails (they often include the best evidence of fraudulent activity). 

Dan Dodman, a partner in the dispute resolution team at law firm Goodman Derrick
Dan Dodman, Goodman Derrick

Then engage a legal adviser. They can look at the evidence and evaluate the possibility of successfully recapturing the funds. Depending on the value involved, this can include the use of investigators to establish what assets the employee has. Are they driving a new Porsche? Do they own multiple properties? Forensic accountants can provide helpful assistance at this stage.

Once evidence has been collected, the investigation will be at a crossroads. If there are significant assets to recover and there is concern that the fraudster may dissipate them, you should consider whether a freezing order is appropriate on their accounts and assets. 

Inevitably, the employee will have to be confronted. This process will be difficult: the individual is likely to be summarily dismissed. Employment law advice should be sought to ensure that no hostages to fortune appear. If presented with enough information, some fraudsters will actually confess at this point. If not, a formal legal case against the individual will have to be launched. 

Finally, it is easy in the above to lose sight of the overall picture in this process. Clearly, the company’s systems and controls have not worked in this instance to prevent someone from defrauding the company. A review is urgently needed to make your company’s infrastructure, policies or procedures more robust. Legal advisers can often provide this analysis or a stress test. Many will do it free of charge as a marketing exercise if asked.

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Recovering funds in these kinds of scenarios can be a challenging exercise and one that is often an emotional experience. The breach of trust can make it a personal issue, particularly if the business is small. Building a strong team early is crucial to taking this emotive element out of the equation and allowing you to focus on repairing the damage to the business.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to

Our next question

I live with my fiancée, in a flat that she purchased solely in November 2019 for close to £450,000. I have contributed to rent since moving in just before the first Covid-19 lockdown in March 2020. We are now looking to buy a house jointly for approximately £800,000, and I’d like to ensure that I don’t make any rookie mistakes as I’ve never purchased a property before. I’m particularly worried about the tax considerations. For example will I lose out on any tax benefits of being a first-time buyer?



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