Lifetime Gifts

Preserving wealth for future generations is often a concern, however your priority should be ensuring you have enough funds available to you during retirement to provide the standard of living you require.

For a free initial meeting to discuss how we can help you contact us online or call us on T: 023 9248 4356T: 023 9248 4356


Subscribe Now

How do lifetime gifts work?

Once you have the appropriate finances in place you should start to consider your options for inheritance tax (IHT) planning.

Gifts made between a spouse or civil partner are free from inheritance tax. Allowances are also transferable to partners, meaning that when one partner dies their personal IHT allowance and nil rate residence band are passed on to the surviving partner.  This enables future beneficiaries to benefit from the couple's combined allowance and nil rate residence relief.

A couple is able to pass on up to £1,000,000 tax free providing the estate includes property valued at £350,000 or more which is being left to their descendants.

Exempted gifts

There are several gift exemptions that can also be used:

Annual exemption – You can gift up to £3,000 a year which will be exempt from your estate. You can also carry an unused exemption forward to the next tax year, raising the amount to £6,000 in the next year. You cannot carry forward any more than one year's annual exemption.

Wedding gifts – Up to £1,000 per person can be gifted as a wedding or civil ceremony present per person, £2,500 can be gifted to a grandchild and £5,000 to a child. 

Regular gifts out of income – Providing you are able to maintain your usual standard of living after making the gift. The gifts need to be regular and should deplete your capital.

Charitable and political donations - Gifts to charities and political parties are inheritance tax free.

The seven year rule

A lifetime gift is treated as potentially exempt for IHT purposes. Provided the donor survives seven years from the date of the gift, it will be excluded from their estate on death.

Taper relief is available where the donor survives at least 3 years  but this is only available to reduce the effective tax rate charged. As most gifts will be less than the nil-rate band, there would be no tax on the gift, and therefore, no taper relief. This will simply result in a reduction in the available nil-rate band to set off against the rest of the estate.

How does tapered inheritance tax relief work?

Years between gift and death % tax paid
Less than 3 40
3 to 4  32
4 to 5 24
5 to 6 16
6 to 7 8
7 or more

It needs to be remembered that the taper relief applies only to the tax payable and not the value of the gift.


Be careful when gifting non-monetary assets as this can create a Capital Gains Tax liability. Please take professional advice first.

If you are interested in becoming a client of Morris Crocker, contact us on 023 9248 4356 or alternatively you can complete the request a quote form opposite.

Back to inheritance tax page.

Request a Quote

Name:
Company:
Email Address:
Contact Number:
Services interested in:









Nature of your business:
Enquiry: (Please add details to help us understand your requirements)

Yes please keep me updated on small business news and events from Morris Crocker.

Please confirm you are human:
 


REF: MC/RQ/1.7

 

What our clients say...

"We appointed Morris Crocker for our annual accounts and audit and found them to be professional, thorough and experienced. During the audit they offered solutions to various issues that we were experiencing. The "audit findings" report was in depth and focused on not only what they had found but the best way to resolve anything identified. They also went above and beyond while producing our consolidated accounts taking it upon themselves to make sure that mapping to the previous year meant that they were giving us the best possible comparisons. The original tender was for 1 year and we have now appointed Morris Crocker for a further two years."  

Latest news...

11/08/2022

New fraud squad launched

The government has launched a new ‘fraud squad’ to identify fraud committed against the public purse. The new Public Sector Fraud Authority aims to ‘modernise the government’s counter fraud response’ and will

READ MORE

Newsletter Sign Up

Sign up to keep in touch to receive our latest news and industry updates.

Yes, I would like to receive email updates providing me with the latest finance news, advice guides and details of future events.



REF: MC/NL/1.2