Gordon Ramsay's unique approach to family wealth

Gordon Ramsay and his wife, Tana, welcomed their sixth child at the end of last year. He has recently spoken out to say that despite being millionaires, they will not be financially spoiling their children during their lifetime.

He commented that the only financial matter that he and Tana have agreed on is that they will gift each child with a 25% deposit for a property rather than a 100% deposit. He commented that this is “so they are not spoilt.”

The Impact of Ramsay’s Approach

Whilst Gordon did not say specifically how much a 25% deposit would actually equate to in figures, the average house price for a first-time buyer in 2023 was £288,000. Most people would, therefore, be over the moon with receiving a £72,000 deposit on a property, especially with the cost of living going up, as this would be a hefty chunk towards the equity in the house.

If Gordon were to make such gifts for all six children, then that would equate to £432,000.

The Broader Context of Financial Assistance

Many children are not as fortunate as Gordon’s children and do not have help from “the bank of mum and dad” to help them get on the property ladder. Others may receive help with money towards furnishing a property, land registry fees, or even money towards the first few mortgage payments.

No matter how small or big a gift is, it is important that you know the rules surrounding gifting, as it may affect your Inheritance Tax allowances when you die. Gifts that you give less than seven years before you die may be taxed depending on who you give the gift to, the amount of the gift, and the date the gift was made.

Understanding Gifting Rules and Tax Implications

Gifts include money, household goods such as furniture, property or land, stocks and shares on the London Stock Exchange and unlisted shares that you have held for less than two years prior to your death.

Gift Allowances

Did you know that each tax year, you can give away a total of £3,000 in gifts, which is taxed at 0% and is known as your annual exemption? In addition, you can carry forward any unused annual exemption from the previous year to the next tax year. You can only do this for one year, though.

Other allowances are available for weddings, including small gift allowances, the nil rate band allowance, and gifts out of income. It is, therefore, essential to know what allowances are available to you before making the gift so that you can gift the asset in the most tax efficient way.

Seeking Legal Advice

It is also important to seek advice prior to making a gift. One of Birkett Long’s Inheritance Tax specialists can help you with this. We can also advise you whether you need to put in place a formal Deed of Gift to document the gift.

If you would like any gifting advice, please get in touch with one of our specialists. I am based in our Colchester office and can be contacted on 01206 217609 or via leah.woodlee@birkettlong.co.uk.