Call us on 01622 690691
Blogs
Posted on 22nd December 2017

Gifting tax efficiently this Christmas

Christmas is a time for giving and many will give money or other assets away at this time of year, but will your gifting be Inheritance Tax (IHT) efficient this Christmas?

Lifetime gifting attracts exemptions as follows:

  • Small gifts – you can give £250 to anyone each tax year without any adverse IHT consequences.
  • Annual exemption – you can give £3,000 away during a tax year as well as use your annual exemption from the previous tax year, if this remains unused.
  • Gifts of our surplus income – gifts must be made out of your surplus income and not made from capital. There is no cap on the amount given away from your surplus income so long as there is a regular pattern of giving and your lifestyle does not change as a result.
  • Gifts to spouses / civil partners – gifts of any amount are free from IHT. Different rules apply for non-married partners.
  • Gifts in anticipation of a wedding / civil partnership – gifts for an upcoming wedding or civil partnership can be popular at this time of year and each parent can give £5,000 free of IHT to their child, grandparents can each give £2,500 to their grandchild and anyone else can give £1,000.

If your Christmas gift does not fall into any of the above categories, it will be treated as a Potentially Exempt Transfer (PET) which means you must survive the date of the PET by seven years for the gift to fall outside of your estate for IHT purposes.

If you would like further advice about IHT efficient Christmas giving, please contact a member of our Private Client team.

Published by

Amy Lane

Solicitor

T: 01622 776427

Email Amy

Related blogs

Is there a threat to agricultural and business reliefs? Read more

ISAs - favourable treatment in estate administration Read more

Law Society backs alternative Wills Read more

Trump’s ambition to scrap Inheritance Tax in America Read more

Time for a change?: Updating the law of wills Read more

Dementia – not only affecting the elderly Read more

More blogs