UK individual → US-person adult child · Illustrative example
Gift £200,000 to an adult child in the US
Keep gift evidence and reporting obligations with the transfer.
Money in
Donor pays: £200,025 including fee
Money out
Adult child receives: US$250,000
US$250,000 received; reporting is not a tax bill
- £200,000 × 1.25 USD/GBP = US$250,000
- £200,000 + £25 separate fee = £200,025
- US$250,000 exceeds the stated US$100,000 reporting threshold
Hypothetical outright personal cash gift to a US person from a non-US individual; invented 1.25 USD/GBP; £25 fee extra; no receiving fee; UK inheritance tax not calculated.
UK gift rules and US Form 3520 need review. Entity, trust and covered-expatriate gifts require different analysis.
Step by step
1. Confirm it is a gift
Record the donor and recipient identities, relationship, residence and genuine intention; distinguish a gift from a loan, salary or business distribution.
2. Review estate consequences
Ask a UK adviser about previous gifts, exemptions, the seven-year rule, retained benefits and any cross-border scope issues.
3. Review the US recipient position
Ask the US adviser about Form 3520, donor aggregation, trust/entity exceptions and the appropriate deadline.
4. Prepare bank evidence
Use a signed gift record, donor source-of-funds evidence and recipient account ownership confirmation.
5. Transfer with a truthful reference
Use verified account details and retain the exact FX/fee confirmation; do not divide gifts to disguise their nature or avoid reporting.
6. Keep both records
The donor retains the estate-planning history and the recipient retains evidence and any required information return.
Assumptions
- The donor is a UK-resident individual within the relevant UK inheritance-tax analysis, and is not a US citizen, resident or covered expatriate.
- The adult recipient is a US person. The cash is an outright personal gift, with no services, repayment requirement, trust, company payer or retained benefit.
- The donor gives £200,000; an invented rate of 1.25 USD/GBP delivers $250,000. A £25 fee is paid separately.
- No UK annual exemption, normal-expenditure exemption, prior gifts, nil-rate-band calculation or final inheritance-tax liability is assumed.
- No other gifts from related donors are assumed for the arithmetic; actual US reporting must consider aggregation.
Documents to gather
- Signed gift letter/deed as advised
- Donor identity, source-of-funds and prior-gift history
- Recipient identity and account evidence
- Transfer confirmation and receiving statement
- UK adviser notes
- US Form 3520 assessment and filing evidence if required
Tax and reporting questions
- Outright gifts can be potentially exempt for UK inheritance-tax purposes; survival for seven years, available exemptions, prior gifts and retained benefits matter. Seven years is not a universal exemption for every arrangement.
- For the stated US-person recipient and nonresident-individual donor facts, gifts exceeding $100,000 in aggregate generally require Form 3520 reporting. Related donors are aggregated, and entity/trust gifts have different rules.
- The IRS generally distinguishes a qualifying foreign gift from gross income. An information-return obligation does not itself establish that the cash gift is taxable income, and exceptions still require review.
Risks
- Gift actually functioning as remuneration or a loan
- Omitted US information return
- UK donor death within seven years
- Retained benefit or trust complications
- Sending company money as if it were a personal gift
Things we cannot know for you
- Donor’s full UK IHT status/history and previous gifts
- Recipient US status and filing circumstances
- Any state or other-country rules
- Gift-document requirements imposed by the receiving institution
When to bring in a professional
- Every substantial cross-border gift
- Trusts, entities or covered-expatriate connections
- Donor or recipient with dual residence/citizenship
- Donor retaining use/control
- A gift that would impair the donor’s financial security
Educational example. Figures are assumptions, not a quote, tax ruling or guaranteed saving. Your facts and both countries’ rules matter.
My brief
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Sources
- Using payment service providers, Financial Conduct Authority (checked 2026-11-05)
- AMLG11630: Source of Funds & Source of Wealth, HMRC (checked 2026-11-05)
- Inheritance Tax: Rules on giving gifts, HMRC (checked 2026-11-05)
- Gifts from foreign person, US Internal Revenue Service (checked 2026-11-05)
