I put this in the thread about Jay's face when the announce happened last night but it probably would be better in here. .and maybe an accountant can help too...

I had a thought about this splitting it equally amongst themselves once they get out...  won't that be deemed a gift, for those that get the lower amounts and need the others to give money to them to make it up to 10k,  and therefore won't it be taxable? 

the prize money they get officially off BB is tax free isn't it but a share out between themselves after  it is finished wouldn't be surely?

They'd have to work it so they cover any tax payable and still all get the same amount if that is what they decided to do with it.. so slightly less than 10k each? So the person who gets a £10 prize from BB will need gifts totalling £9990 and will have to pay the most tax?  I know you can gift a certain amount of money to somebody that they don't have to pay tax on it so maybe they can work it out that way and make it up in little gifts.. very complicated tho..

Blimey my head hurts after that

HAAAAAAAAAAAAA Tom £10....

But are they going to stick to the original plan of going 10,000 each when they get out?..if not someones got Tom as a lifelong stalker....

0006: Tom's giving Aaron some advice. He's telling him not to worry about the money, because it's 'the root of all evil' #BBUKLIVE

Tom's ( and Aaron have ) got nothing to worry about then  

Nice point Olly - wonder if we'll ever hear how this pan's out  

Hi Scotty  

Hope the cold is easing.

Are you talking about inheritance tax Olly?

If you do not die within 7 years of giving the gift/ money, then it doesn't count for tax purposes.

Oh dear, Alex got the most, and I have a feeling that she may win too, so she will end up with £70,000! 

No Fluffs I wasn't talking about that, that applies to somebody who was given money by someone as a means to avoid inheritance tax. .ie they hope to live for 7 yrs after the gift and it has to be over a certain amount too.... £3/6 k I don't recall any more....

I am talking about Capital Gains Tax or whatever it may be called now or just basic income tax... am sure there is something that means they would have to declare the gifts as part of an income tax return and may be liable for tax on all or part of it. .doesn't apply to official prizes tho, they are tax free..

I could be wrong it's been a long time since I worked in that field.. and add to that my brain has a lot of holes in it now..  

Just shows how little he knows. Money IS NOT the Root of all Evil.

The LOVE of Money is the Root of all Evil.

Only 60,000 if they are going to share the 50Kevenly.

Sorry Olly, I don`t have a clue about that sort of stuff but I appreciate your post for those who do. 

I`m thinking, what if they don`t decide not to split it and Alex keeps the £30,000, will it spoil her chances of winning?  Would the GP think she`s already won enough? 

Hi velvet  

I`m feeling a much better today thank you, my wee fish supper.  

Capital gains....I see.

Can't say 100% for sure, but if you Gift all or part of a Gift then there's no gain or loss, so I don't think it counts.

And as I believe winnings from things like game shows are classed as a Gift for tax purposes, there probably won't be any ordinary tax liabilities either. Not for the HMs anyway.

They won't get the money until they are out, I believe. So the can't share or keep it until after someone has won.

No Fluffs you don't get what I was saying.. .I know winnings are Tax free but once they receive their £10 or £30k whichever the final 5 tell BB they want to receive it then becomes their personal money. . it is at that point they are talking about sharing it out equally as they can't share it til they get it in their individual hands anyway and bank the chqs... .ie tis no longer prize money at that point..  I was just wondering if once they gift each other the amounts they need to gift, in order for them to all end up with £10k, will some of those gifts then become taxable income for the ones it got passed on to..

anyway I googled cos it was annoying me not knowing and I think they'll be ok... you can gift up to £3k without any danger of anybody incurring tax I think   my head hurts now anyway  ...dunno why my brain went off in that tangent. .wish it hadn't..

I don't think capital gains applies to this as the money is generated initially from a prize fund. If the source was from the sale of something (a house, shares etc.) then there is a capital gain. Those people that won the mega euro lotto the other month can gift the money to as many people they like and none of them would be liable for anything more than the interest made on it in a savings or current account.

I'm not an accountant though.

Yes Olly, it's part of their personal money now, but it was GIFTED to them, they didn't earn it. So if they give some of that money away then they are gifting a gift. So they can give away more than 3K, which is what Alex and Jay would have to do.

cheers guys....

I wish I'd never even thought of it in the first place... it made my head hurt trying to remember all my tax stuff from yrs back for no good reason either

Yes Olly, I do get you. As long as they don't give away more than they got in prize money then they are gifting a gift, therefor no gain involved. No CG tax to be paid by the Gifter and as it can be classed as a gift to the recipient They shouldn't have to pay ordinary tax.

And if it's not classed as gifting a gift we're back to the question of inheritance tax which doesn't come into it if the deceased DOESN'T die within 7 years or their estate is worth less than a certain amount.

Sorry Fluffs, but inheritance tax has even less to do with this question than capital gains. 

It's not the initial prizemoney we're talking about here. It's how the money is classified that the HMs have to redistribute amongst themselves.

Of course, but my point is.. if they all decide to keep what they`ve won could it harm the biggest money winner`s chances of winning the grand prize? Alex and possibly Jay. And, if they say they`ll split it on the outside, will the GP believe them? 

Sorry suzy, but it does, because if the money  is not classes as Gifting a gift then it is part of their personal estate and will fall under inheritance rules.

But how will we know what they will or won't do with it once they are out. If they openly DON'T go along with BB on this then there won't BE any money?

Not if it's the share of a prize fund. So all those lottery syndicates are subject to inheritance issues at source then? May be, possibly when the cash has been generated in to capital assets but not at source, no.

If the donor dies within a certain period of the gift - is it 7 years - does the gift not then become taxable?

Oh, I don't get this. The Donor is Endemol Ltd./Inc./PLC isn't it? The 'contestants' are taking part in this show contractually to win a prize, and they are divvying up the prize at the direct instruction of the Donor. What's inheritance or estates or probate got to do with any of it? El Loro? 

To clarify:

Olly asked a questio about the HMs REDISTRIBUTING the cash

I asked if she was talking about Inheritance tax

Olly said no it was capital gains she was meaning

I said that I thought it would be classed as Gifting a Gift and so as no gain would be involved no CG should be involved and as the ones being given the extra money were in effect being given a gift then they shouldnt need to pay ordinary tax either.

Olly wondered though that once  the money was in the HMs personal accounts the money would no longer be classed as 'Gift Money' just their own personal money.

I then said that as long as the amount given away was less than the initial 'GIFT' then it should still be classed as Gifting a Gift (but forgot to add at the time that their is a time limit on how long after receiving a gift you can give it away and it being classed as gifting a gift)

I then said that if it CANNOT be classed as Gifting a Gift it would then be classed as part of your personal estate and would then come under Inheritance Tax rules.

As I say, iy's not about the prize money directly, it's about the redistributed 50K AFTERWARDS.

Yes, but only if that amount of money would have made the full value of the donor's estate more than a certain amount.

As things stand:-

Alex is being GIFTER 80 K

Jay is being GIFTED 15K

Louise is being GIFTED 4K

Aaron i being GIFTED 990 (0.99K)

Tom is being GIFTED £10 (0.01K)

To effectively give them all 10K, Alex will have to give away 20K and Jay will have to give away 5K.

It is the legal tax status of this 25K that Olly was asking about, as she is correct in saying it will no longer be lgally classed as 'Prize money'.

You can go on as much as you like. I don't agree with you, but I'm happy for you to have the final word(s) on it 

If Alex gives away 20K, and it's classed as HER giving a gift of HER OWN money, then it falls under inheritance tax rules.

the threshold (£325,000 in 2011-12).

Aww Suzy. It's not a case of getting everyone to agree with me. It just seemed to me that we were talking about differentaspects at different times.

I.E. To me it seemed that you thought we were talking about the INITIAL prize money, whereas we were talking about the legal status of the money they were (supposedly) going to re-distribute.

This would be a private transaction and have nothing to do with Endemol, BB, C5 or (pretty much) the fact that the money was ORIGINALLY prize money.

Thank you, I couldn't remember what the amout was. It is probably unlikely that any of them woul have an estate high enough in value to have to worry about Inheritance tax. But it has to come under some rules. So if it can't be classed as Gifting a Gift. then it's Inheritance Tax rules. Even if that means it can be effectively ignored.

What Olly and I were initially discussing was what the legal tax status would be. Not really whether they would actually have any tax to pay.

I know. All this over a hypothetical question.

Jay's just stole the brief case off the wall  BB has made him put it back 

oops ..I'm quiet for days then my brain has a fart and wanders off on some do they or don't they pay tax query and instead of googling to double check something I post the brain fart instead... ....  sorry about that guys

will he get a tax rebate? 

*hides *