News & Views

‘Tis the Season … (for some Inheritance Tax advice)


Close up image of heap of British chocolate coins in gold and silver foil, with Christmas decorations in red and greenStruggling for gift ideas? Can’t remember if your niece likes Frozen or Inside Out? Will your uncle use a Kindle? Do your grandchildren have the new Star Wars BB-8? To make life easier for you, here are some gifting ideas from us at Sherrards (and some associated tax advice):

Don’t give dogs for Christmas, make PETs

Gifts to individuals are not taxed on the date the gift is made. These are called PETs. The donor must live for 7 years before the gift is completely out of their estate. If the donor dies within 3 years then the amount gifted is brought back into their estate and taxed appropriately.

If the donor dies between 3 and 7 years of the gift, then the rate of tax is reduced. This is known as tapering relief.

Buy your parents a cruise with the annual exemption

A total of £3,000 a year is exempt from the Inheritance Tax gifting rules. If you didn’t utilise your annual exemption last year you can add it to this year’s meaning you have a total of £6,000 tax free – enough to send mother and father to “see the Northern lights” for 2 weeks.

PS4 vs Xbox One

You can make unlimited gifts of £250 to unlimited recipients in a single year. You cannot, however, give the same person £250 more than once. So little Tommy will have to settle for one games console this year. The decision is, which one?

Pay for a child’s education

If you have surplus income (after tax) and have enough money to maintain your lifestyle then you can make gifts from this income to go towards a savings account for a grandchild, insurance policy premiums or (even more) gifts.

The less fortunate

Christmas is about giving. And who could benefit more than a charity? Luckily there’s no Inheritance Tax on gifts to charities, universities or amateur sports clubs so you can be as generous as you like!

 

We wish you all a Merry Christmas and a Happy New Year!

 

 

If you would like any further inheritance tax advice please contact Raveet Phull,  Nicole Marmor or our Probate department on 01727 832830.

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