Lifetime Gifting: What Are The Options?

There are limits to what you can give away without any tax implications – here is a breakdown of some of the key allowances and exemptions.

• The Potentially Exempt Transfer (PET): Gifts made to individuals will escape IHT completely if you survive for seven years following the date of the gift, regardless of the value. If you die within seven years then your estate may still pay IHT on the gift.
• Annual Exemption: Gifts up to £3,000 in total in each tax year (April 6th to April 5th following year) escape IHT. If any of your exemption is left unused it can be carried forward to the next tax year.
• Normal Expenditure Out of Income: This exemption covers gifts made from your income (rather than capital), that are part of your normal expenditure and that leave you with enough income to maintain your usual standard of living. Examples might include regularly paying a grandchild's school fees.
• Small Gifts: Gift up to £250 per person, per tax year, IHT-free. There is no limit on how many individuals you can benefit. However, this cannot be combined with other exemptions, such as the Annual Exemption.
• Gifts for Marriage or Civil Partnership: Gift tax-free to the happy couple before or on their special day. The amount you can gift IHT free varies between £1,000 - £5,000 depending on your relationship to the recipients.
• Gifts to Charities: Gifts to qualifying charities or political parties are completely exempt from IHT.

Remember

Not all of these exemptions and allowances can be used in conjunction with each other. This is a general overview and we recommend that you take personalised IHT planning advice on lifetime gifting from one of our experts. Contact us today on 020 8290 0440.