Other Inheritance Tax Exempt Gifts
You can give away £3,000 in each tax year without paying UK Inheritance Tax. You can carry forward all or any part of the £3,000 exemption you don’t use to the next year but no further. This means you could give away up to £6,000 in any one year if you hadn’t used any of your exemption from the year before.
You can use your ‘annual exemption’ with most other exemptions, such as the ‘wedding/civil partnership ceremony gift exemption’. So, if one of your children marries or forms a civil partnership you can give them £5,000 under the wedding/civil partnership gift exemption and £3,000 under the annual exemption - a total of £8,000. You can’t, however use your ‘annual exemption’ and your ‘small gifts exemption’ together to give someone £3,250.
Small Inheritance Tax Planning Gifts
You can make small gifts, up to the value of £250, to as many people as you like in any one tax year (6 April to the following 5 April) without them being liable for Inheritance Tax.
Remember you can’t give a larger sum: £500, for example, and claim exemption for the first £250. You can’t use this exemption with any other exemption when giving to the same person. In other words, you can’t combine a ‘small gifts exemption’ with a ‘wedding/civil partnership ceremony gift exemption’ and give one of your children £5,250 when they get married or form a civil partnership.
Inheritance Tax Gifts As Part of Normal Expenditure
This is a commonly missed option. Any gifts you make from your after-tax income (but not your capital) are exempt from Inheritance Tax if they’re part of your regular expenditure.
This includes:
• monthly or other regular payments to someone, including gifts for Christmas, birthdays or wedding/civil partnership anniversaries
• regular premiums on a life insurance policy (for you or someone else)
You need to be able to prove affordability so it’s a good idea to keep a record of your after-tax income and your normal expenditure, including gifts you make regularly. This will show that the gifts are regular and that you have enough income to cover them and your usual day-to-day expenditure without having to draw on your capital.
Wedding Gifts/Civil Partnership Ceremony Gifts
Wedding or civil partnership ceremony gifts (to either of the couple) are exempt from UK Inheritance Tax up to certain amounts:
• parents can each give £5,000
• grandparents and other relatives can each give £2,500
• anyone else can give £1,000
You have to make the gift on or shortly before the date of the wedding or civil partnership ceremony. If it is called off and you still make the gift, this exemption won’t apply.
Maintenance Gifts
You can also make Inheritance Tax-free maintenance payments to:
• your husband or wife
• your ex-spouse or former civil partner
• relatives who are dependent on you because of old age or infirmity
• your children (including adopted children and step-children) who are under 18 or in full-time education
Call one of our Inheritance Tax Advisers on 0845 230 9876 or complete the
enquiry form in confidence to see how we can assist you.
Click on the links below to discover more solutions to Inheritance Tax.
- Life Insurance To Pay the Inheritance Tax
- Inheritance Tax Trusts
- Nil Rate Band Discretionary Will Trust
- Purchased Life Annuity
- Business Property Relief
- Agricultural Relief
- Realigning of Assets
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