Recent HMRC data shows that Inheritance Tax (IHT) receipts rose to £4.3bn during the period from April to September 2024, a £400m increase on the same period the previous year.
With over a quarter (27%) of 18 to 34-year olds (1.1m people) holding out for an inheritance before going ahead with major life events and 12% of UK adults regifting to their children, grandchildren, or other family members, here’s a reminder of the vital gifting numbers to gen up on before the end of the tax year:
- You can make gifts worth up to £3,000 in each tax year. These gifts will be exempt from IHT on your death, even if you die within the seven-year period that otherwise applies to lifetime gifts. You can carry forward any unused part of the £3,000 exemption to the following year but if you don’t use it in that year, the exemption will expire.
- Certain gifts don’t eat into this annual exemption and don’t give rise to IHT, e.g. wedding gifts of up to £5,000 for a child, £2,500 for a grandchild (or great grandchild) and £1,000 for anyone else. Individual gifts worth up to £250 per year per recipient are also IHT free, as are Christmas or birthday gifts made from regular income.
While these are relatively small sums, you should use these up where possible without compromising your own financial security, to gradually reduce your overall estate.
A settled pattern of gifts from surplus income can also be made. Conditions apply, and advice would be needed to ensure that the gifts are made and evidenced in the right way.
Contact hello@cailean.co.uk or call us on 0131 510 1971 for an initial consultation about IHT planning.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority (FCA) does not regulate will writing, tax and trust advice and certain forms of estate planning.