Legal News | 12.12.24

Gifting is for life, not just for Christmas

Making gifts during your lifetime is an effective way to pass wealth to loved ones, whilst also mitigating inheritance tax. As announced in the Budget, many pensions will be subject to inheritance tax from 2027.  The Office for Budget Responsibility has estimated an 85% increase in inheritance tax receipts as a result of this change!

Gifting will become increasingly attractive for families this Christmas, and in the coming years.

Gifts can be made from capital.  However, an individual can only gift £3,000 of capital per year, beyond which such gifts are subject to surviving at least seven years thereafter to be free from inheritance tax unless they qualify for exemption (e.g., as a gift to a spouse or charity).

Gifting surplus income (if you are lucky enough to be in that position) remains a very inheritance tax effective option.  According to recent estimates, families saved £27 million in inheritance tax last year by making gifts from surplus income.

However, the exemption remains relatively unknown.  According to HMRC, only 2,760 estates successfully claimed this exemption over the past six years.

If you are thinking about making gifts from excess income we recommend that you seek advice first.  There is specific criteria to satisfy and ideally records to keep.

If you would like further guidance on inheritance tax planning, please do get in touch with the Wansbroughs’ Private Client Team at wealth@wansbroughs.com.