I want to gift my son £5,000 a month to pay extra off his mortgage. Will he have to pay tax or a penalty on this? 

Arthur Weller replies:  

He will not have to pay tax or a penalty on this. If you survive for seven years after gifting to him, those transfers will not count for inheritance tax (IHT) purposes. But if you do not, the £5,000 transfers will be deemed 'failed’ potentially exempt transfers (PETS) and included in your estate when you die. This could result in your inheritors paying more IHT. As to whether these transfers will qualify for the 'normal expenditure out of income' exemption from IHT, please refer to HMRC’s Inheritance Tax Manual at IHTM14231.