Industry News - 7th March 2023
If you want to make cash gifts to your family and friends this tax year, you should be aware of the Inheritance Tax (IHT) implications. The current 2022-23 tax year will end on 5 April 2023 and it’s worth bearing in mind the gifts you can give and the restrictions which may apply.
You can give away up to £3,000 worth of gifts each tax year. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you didn’t make any cash gifts in 2021-22, you could gift up to £6,000 this tax year.
There are also generous exemptions for normal gifts made out of your income, but you must be able to maintain your standard of living after making the gift. There are also reliefs available for wedding or civil ceremony gifts. You can gift up to £1,000 per person, with higher limits of £2,500 for a grandchild or great-grandchild and £5,000 for a child.
You can also give as many small gifts of up to £250 per person as you want during the tax year but only if you haven’t used another exemption on the same person. There is no IHT to pay on lifetime gifts between you and your spouse or civil partner as long as you both live permanently in the UK.
Please be aware that any other gifts, outside these limits, could count towards the value of your estate. For more information on this and for tax planning advice, please get in touch.