Backpaying Gift or Inheritance from 4 years ago

[Seasider4374]

So, my grandmother passed away 4 years ago at the ripe old age of 104 in 2020.

7 years prior she, at age 95, gifted me and each of her other grandchildren £5000 on the basis that (had she not have been supergran!) decendants would have already (under normal life expantancies) had received an inheritance. At this time I was tax resident in the UK.

And so upon her passing 7 years later all grandchildren were not in her will (having already received their "inheritance" 7 years prior).

After her property was sold, estate settled, and inheritance paid to all of her three children, my father transferred £10,000 from the sale of her estate that he had received, to my UK account in December 2020 where I have basically let the money sit (I know – let’s not go there regarding money management…)

At this time I was, and had been for many years prior, and remain since, tax resident in Japan.

However I did not declare this windfall to the Japanese tax office on my tax return for 2020, which following my initial steps into financial learning over the past year, I realise I very much should have…

When money was deposited the exchange rate was around 140 GBPJPY and so I essentially received 1.4M yen, which I believe a 1.1M basic exemption is applicable to, meaning I owe tax on an extra 300k JPY income for that year, plus interest.

But will this be viewed as a Gift from my Dad, or Inheritance from my Nan within the tax office? To my knowledge there was no request (written or verbal) from my Nan to my Dad that funds be released to me and my sister upon her death?

I’ll go to the Tax Office to explain this, after March 15th, once the current assumed chaos subsides.

But for my own future reference, had this amount been deposited into my account in 2023, which section(s) would I have needed to enter this value on my Kakutei Shinkoku? Which page numbers in the Income Tax Guide (English or Japanese) cover this event?

Do I need a separate form to include gifts and/or inheritance on? I currently fill out the main (FA2203&FA2303) and my business expenses (FA7001&FA7051) forms.

Finally, moving forward will I need to also list yearly deposits of around £300-ish from my parents for my son’s birthday/Christmas/Otoshidama that I receive on my JP Tax return?

I’m keen to move some of this £10k to Japan soon to invest, but want to do it the correct way without causing any flags at the tax office. And even more importantly to learn and pay the complete tax I owe to Japan moving forward.

[RetireJapan]

Good news! Inheritance tax in Japan has a 30m+ yen tax free allowance. Anything under that doesn't need to be declared.

https://www.retirejapan.com/?s=inheritance

[captainspoke]

RJ is correct.

Maybe 6 yrs ago I inherited about US$12k. I was there doing my usual tax return and an extra sheet detailing the payment, exchange rate at the time, and so on. They said not to worry about it, and no need to even put it on the tax paperwork.

[Beaglehound]

I may be wrong but I don't think this would be classed as an inheritance since the money came from your dad. Having said that, I would file it under 'very unlikely' that the tax folk are going to either find out about it or, frankly, be that concerned about what would be a relatively small amount of tax due. Personally I would probably write it off as a mistake and make sure I was compliant going forward. To wit, the gifts you are now receiving are well under the limit and no need to do anything tax-wise about them.

[Seasider4374]

Thanks @RetireJapan - I'll devour that linked page at length later.

Thanks @Captainspoke - you don't happen to remember the form number needed just so I can take a look for myself?

Thanks @Beaglehound, and again @RetireJapan. Just to check; any amount under any gift/inheritance limit does not need to be declared, or will have no tax applied to it? I.e. do I need to declare small deposits or even overseas holdings on my JP tax return?

[RetireJapan]

Thanks @RetireJapan - I'll devour that linked page at length later.

Thanks @Captainspoke - you don't happen to remember the form number needed just so I can take a look for myself?

Thanks @Beaglehound, and again @RetireJapan. Just to check; any amount under any gift/inheritance limit does not need to be declared, or will have no tax applied to it? I.e. do I need to declare small deposits or even overseas holdings on my JP tax return?

There is nothing to declare for amounts under the tax free limit, although having read your post again I think Beaglehound might be right.

[sutebayashi]

Me too, it sounds like (if they cared) the tax people would see it as a gift since you would not be a statutory heir for the inheritance, from Japan’s inheritance tax point of view.

[Seasider4374]

Thanks again @RetireJapan for the further clarification.