Avoid adverse inheritance tax effects this Christmas
PUBLISHED: 09:48 01 December 2016 | UPDATED: 09:31 02 December 2016
Tis' the season of giving. Now is the perfect opportunity to look at making a gift for inheritance tax planning
With Christmas fast approaching, our thoughts turn to Christmas shopping and present buying. Instead of or in addition to the gift of a present, now is also the perfect opportunity to look at making a gift for inheritance tax planning.
There is usually no inheritance tax to pay on small gifts that you make out of your normal income, such as Christmas or birthday presents under the ‘normal expenditure out of income rules’. You can also make multiple larger gifts of up to £250 to different recipients in each tax year with no adverse inheritance tax effect.
If you are feeling more generous and want to do some serious inheritance tax planning, then you can give away up to £3,000 worth of gifts in each tax year, without it being added to the value of your estate. This is known as your personal allowance. It is also possible to bring forward your unused personal allowance from the previous tax year to seriously make a splash. This is an effective way to reduce the capital value of your estate without you having to survive for seven years.
For those who are feeling particularly generous, you can give more than your personal allowance, provided you survive for seven years from the date of the gift, the gift will not be included in your estate for inheritance tax purposes, which makes for some serious inheritance tax planning.
Christmas is often a time when our thoughts turn to those who may be less fortunate than ourselves and we look to give to good causes. Gifts to charities are wholly exempt from inheritance tax, so there are no adverse effects to giving generously.
And finally, gifts between spouses are generally exempt for inheritance tax purposes, so don’t hold back, treat your spouse to something special this Christmas.
For more information or advice please contact:
Susan Glenholme, Partner
T: 01727 735636