Gift Allowance - a few questions to hopefully cut my tax bill

brynhans

How does the gift allowance work?

Can I gift the £3000 allowance to my girlfriend without either of us paying tax on that amount? Or do I have to pay income tax on my yearly income first, then gift it? (ie can i take that allowance off my profits prior to working out my income tax)

Hope this isn't a silly question - I've heard a lot of conflicting advice

CLAPTON

you can give your girl friend as much as you like without either of you paying any tax

the only issue is concerning inheritance tax
a. if you die within 7 years
b. and your estate is in excess of the then inheritance tax limit (currently 325,000)
c. then the value of the gift can be added back into the value of the estate for IHT purposes; even then thetax will usually be paid from the estate

McKneff

Dont forget, if you give your girlfriend £3k or £6K it is legally hers and you would not be able to get it back is she so wished, she could blow the lot.

And in all honest, it just isnt done to come on here and ask for advice on how to avoid tax, its actually a criminal offence.

olivetti

McKneff wrote: »

And in all honest, it just isnt done to come on here and ask for advice on how to avoid tax, its actually a criminal offence.

It is not illegal to avoid tax. Not yet any way...

It is illegal to evade tax though.

CLAPTON

McKneff wrote: »

Dont forget, if you give your girlfriend £3k or £6K it is legally hers and you would not be able to get it back is she so wished, she could blow the lot.

And in all honest, it just isnt done to come on here and ask for advice on how to avoid tax, its actually a criminal offence.

bizarre
no pension?
no ISA?
no index linked saving certs?

jennifernil

brynhans wrote: »

How does the gift allowance work?

Can I gift the £3000 allowance to my girlfriend without either of us paying tax on that amount? I am self employed and want to know if I can avoid paying tax on another £3000. If so, how would I record this amount in my tax return?

I've heard talk about carrying over the gift allowance (though this info may be out of date) for one year? Does this mean that I can gift my girlfriend £6000 this year without either of us paying tax on that £6000.

Any help or advice would be appreciated

I think he means without paying ANY tax on it.....as in income tax.

In which case the answer is NO!

KiKi

I agree with Jennifer - I think the OP was asking if they could take £3000 from their earnings and give it to his girlfriend so that he didn't have to declare it as earnings and pay income tax!

To which the answer is no! You have to declare it as profit, pay income tax, and THEN give it to your girlfriend without having to pay any other tax on it.

HTH
KiKi

brynhans

ok that's cleared that up. Thanks Jennifer and KiKi. Thought it was too good to be true to effectively get an extra £3000 untaxable allowance just like that.
Forgive the naivety, but if you don't ask.......

P.S in light of this information, I think I'll get my girlfriend a box of chox and some flowers instead of the £3000. Thanks for the advice McKneff