UK's Senior Managers And Certification Regime - All Change On 9 December?
With Christmas less than a week away, you may now be panicking about what to give your loved ones. Rather than join the chaos of the last minute Christmas shoppers, you might consider giving a cash gift this Christmas.
While substantial cash gifts require survivorship by 7 years to fall out of account for Inheritance Tax (IHT) purposes, there is a whole raft of exemptions which take a cash gift out of the IHT net immediately with no survivorship requirement.
You can give away up to £3,000 each year free from IHT. If you do not use your annual exemption in one tax year, it can be carried over for use in the next tax year (but only for one year).
Gifts between UK domiciled spouses and registered civil partners are exempt from IHT.
You can give as many people as you like small gifts of up to £250 per year. This is a popular exemption for grandparents wishing to give some money to their grandchildren.
Gifts made from surplus income of any amount are free from IHT immediately if you can show that the income was genuinely surplus to your requirements and that the gift did not affect your usual standard of living. A pattern of giving needs to be established to take advantage of this exemption, for example, setting up a standing order. It is helpful to keep some sort of record of your income and general expenditure in case it was ever queried whether the money you gave away was ‘surplus’.
Winter wedding coming up? If so, you can gift the following amounts free from IHT, depending on your relationship to the bride / groom:
Gifts to UK registered charities are exempt from IHT. There is no IHT on gifts made to political parties provided they have two members elected to the House of Commons or one member elected to the House of Commons who received at least 150,000 votes in the general election.
You will not pay IHT on gifts to help with living costs if they are made to an ex-spouse, ex-civil partner, a relative who is dependent upon the person making the gift because of old age, disability or illness, or a child who is under 18 or in full time education. For these purposes a child includes an adopted child or a step-child.
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