CHRISTMAS IS THE TIME FOR GIVING
Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available to them. Note that certain gifts can also have capital gains tax (CGT) implications.
THE IHT ANNUAL EXEMPTION – USE IT OR LOSE IT!
Although not particularly generous at £3,000 per donor per annum if this annual IHT exemption is not used by 5 April it is lost, although it is possible to carry the allowance forward one year if unused. This means that if the annual allowance for 2017/18 was not used an individual may make gifts of up to £6,000 in 2018/19.
Where the gifts to individuals exceed the annual exemption there may still be no inheritance tax to pay if they survive for 7 years following the gift or the gift falls within the £325,000 nil rate band.
GIFTS OUT OF INCOME ARE NOT TAKEN INTO ACCOUNT FOR IHT
A more generous inheritance tax exemption applies where the donor can prove that he or she is not transferring capital but is making gifts out of their income. There are detailed conditions for this exemption to apply requiring records to be kept of income and expenditure in order to prove that there is sufficient surplus income each year to make regular gifts to the beneficiaries. We can of course assist you in keeping the necessary records to satisfy HMRC.
FURTHER INFORMATION OR ADVICE:
If you would like further information or advice about any of the issues raised in this newsletter or any other tax-related matter then Steve Bird would be delighted to hear from you: firstname.lastname@example.org