Expert opinion: Forget Black Friday and take advantage of these UK tax efficient gift ideas instead
Today is Black Friday, when millions of pounds is set to be spent every hour on internet purchases in time for Christmas.
If you’re not keen on jumping on yet another American export, forget Black Friday and consider these UK tax efficient gift ideas instead.
Annual £3,000 exemption
Current rules allow you to make outright gifts up to an annual limit of £3,000 with no inheritance tax consequences.
Further, if this exemption has not been used in a tax year it can be carried forward (for one year only).
This means that if you have not made any capital gifts since 5 April 2013, you could make a gift of £6,000 now with no inheritance tax implications.
Small gifts exemption
You can make gifts up to £250 to as many people as you like in any tax year without any inheritance tax consequences. You could, for example, give £250 to any children or grandchildren now (and again after 6 April 2015) with no inheritance tax consequences.
Please note that you cannot combine this small gifts exemption with any other exemption (e.g. you cannot combine £250 with the £3,000 annual exemption and give someone £3,250).
Gifts that are part of your normal expenditure
Any gifts you make out of your after-tax income (but not your capital) are exempt from inheritance tax if it can be shown that you have enough income to cover the gifts and your usual daily expenditure without having to resort to using up your capital.
Gifts from surplus income must be shown to be part of your regular expenditure and could therefore cover a monthly direct debit payment e.g. to a child or, alternatively, regular premiums on a life insurance policy (for you or for someone else).
If you wish to make regular gifts from your surplus income then we recommend that you keep a schedule of your (after tax) income and expenditure, including gifts, that can be shown to the Revenue after your death if required.
Gifts made in contemplation of marriage
The New Year may bring with it some exciting events such as weddings or civil partnerships. if this is the case, and your son or daughter is entering into such nuptials, you can give them a gift of £5,000; if it’s your grandson or granddaughter you can give a gift of £2,500 and even if it’s not such a close relation, you can still make a gift of £1,000.
If you are considering making a gift or would like to make gifts as part of wider tax planning, Wansbroughs has the expert advice to assist. Please either get in touch with your usual contact or email us at email@example.com