Legal News | 3.03.22
Ash Wednesday, Cash Thursday?
Pancake Day is behind us and one thing you may not want to give up for Lent is lifetime gifting. Here is a brief reminder of some of the inheritance tax exemptions available on lifetime gifts:
• Annual exemption. You can gift £3,000 in a tax year without inheritance tax implications. What’s more, any unused exemption can be carried forward (rolled-over) for one year meaning you may be able to gift up to £6,000 in a year; however, the current year’s exemption must be used before any brought forward from a previous year.
• Small gifts exemption. You can gift £250 to any number of people in a tax year free of inheritance tax; however, this is an all-or-nothing exemption and if total gifts to a person in a year exceed £250, the exemption is lost.
• Gifts in consideration of marriage or registration of civil partnership. If someone you know is getting married or entering into a civil partnership, you can gift them up to certain limits without inheritance tax implications. The limits are £5,000 for a parent of a party to the marriage or civil partnership, £2,500 for a remoter ancestor (grandparent, great-grandparent) or a party to the marriage or civil partnership and £1,000 for anyone else.
• Normal expenditure out of income. If you have excess income, you may be able to gift it free of inheritance tax if you satisfy certain conditions. The conditions are that the gift is part of your normal expenditure out of income and that, after making the gift, you have enough income remaining to maintain your normal standard of living. To claim this exemption, it is important that you keep detailed records of your income and expenditure.
If you would like more information on inheritance tax and lifetime gifting, please contact your usual Wansbroughs contact or e-mail the private client team at email@example.com.