Financial gifting

Giving or leaving a financial gift in a tax-efficient way

As well as being extremely gratifying, gifting money to loved ones during your lifetime can help reduce any potential Inheritance Tax (IHT) bill when you pass away. And if you gift money via a trust, it can become an even more effective financial planning tool.

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Tax efficient gifting

Each of us has an annual ‘gift allowance’, which allows you to give away £3,000 worth of assets or cash each year without incurring any IHT – even if you were to die soon afterwards. You can also make smaller gifts of up to £250 outside of this allowance, tax-free, provided you haven’t given a gift to the same person as part of your £3,000 annual allowance.

If you don’t use your annual £3,000 allowance, you can carry it forward – but only for one tax year. You can also gift any amount to charity without incurring a tax bill. And, if you leave at least 10% of your net estate to charity when you die, it will reduce your IHT rate from 40% to 36%.

Any gifts over £3,000 are called a Potentially Exempt Transfer, because no IHT is due on it provided you live for at least seven years. If you were to die within seven years of giving the gift, it becomes a Chargeable Lifetime Transfer, and IHT will be due.

To speak to one of our advisers about tax efficient gifting today call 0800 915 0000

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