Did you know that there are several categories of gifts that are exempt for tax purposes?
As long as the gift remains within the given allowances, you can give away £3,000 worth of gifts each tax year (6 April to 5 April). This is known as your annual exemption.
You can also carry any unused annual exemption forward to the next year meaning that if you haven’t used last year’s allowance you could give away £6,000 tax free.
In addition to this, you can also give away, tax free, each tax year:-
- £250 to any number of separate beneficiaries as long as you haven’t used another exemption on the same person.
- Normal gifts out of your income is exempt from tax. To qualify under this category the gift must be part of your normal expenditure i.e. it must be from your income rather than capital and you must be able to maintain your standard of living after making the gift.
- Wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great grandchild, £5,000 for a child).
- Gifts between spouses/civil partner – any gifts made to a spouse or civil partner either in life or on death passes free of Inheritance Tax.
- Gifts to Charities.
It is important that you utilise these allowances during your lifetime as they will not only reduce the value of your estate but potentially reduce your overall liability to any Inheritance Tax upon death.
Should you wish to find out more about making gifts in your lifetime or by Will, please contact our Private Client team 0n 0131 516 5354 / 0141 530 2021