Tax exempt gifts to sons

lookin4arnserz

Hi
Following a thread I posted last year, I understand that that an individual is permitted to gift a maximum of £3000 to each son or daughter in a tax year, and is allowed to use the previous year's allowance of £3000 if unused totalling £6000 in two consecutive years. (Many thanks for that advice)

My wife and I have 2 sons. Until now, we have never made any gifts in the past.

Does this mean each of us can gift each son £6000 before the end of this current tax year ending 5th April 2012 (£3000 for year ending the 5th April 2011 plus £3000 for year ending 5th April 2012) and then to be able to gift a further £3000 each in the 2012/2013 tax year.

Is it nescessary to keep dates and a record of when these payments were made or/and do they need to be entered on our annual tax returns.
Many thanks in advance
M

thenudeone

There is no tax on gifts in the UK, up to any value. So you can happily give anyone everything you own without any immediate tax problem, and there is no need to put anything on your return (although if you give assets such as shares, a CGT charge may arise)

However, if you die within 7 years then a proportion of the value of gifts made in the last 7 years (on a sliding scale) is added to your estate's value for Inheritance tax purposes. Certain amounts are exempt including up to £3k [STRIKE]per person.[/STRIKE] [edit] per donor in total, not per recipient

I suggest you read up on IHT, starting here http://www.hmrc.gov.uk/inheritancetax/how-to-value-estate/gifts.htm#1

le_loup

lookin4arnserz wrote: »

Does this mean each of us can gift each son £6000 before the end of this current tax year ending 5th April 2012 (£3000 for year ending the 5th April 2011 plus £3000 for year ending 5th April 2012) and then to be able to gift a further £3000 each in the 2012/2013 tax year.

This is entirely true to avoid Inheritance Tax on that money should you die within 7 years of the payment being made. However, as said above, should your estate not be large enough for IHT or you are going to live for more than 7 years or you don't care about the IHT implications, you can give away any amount you like to anyone you like.

jennifernil

I'm not sure you have interpreted the rules !00% correctly.

When talking about gifts that will be discounted for IHT purposes.....

Each of you can make gifts of up to £3000 in any tax year, this can be to one person or to several, but the total is £3000. You can carry forward one year's allowance, so up to £6000 can be gifted in that case.

So you can gift £6000 this year, and so can your husband, then £3000 each next year. As you have 2 sons, you could give your £6000 to one, and your husband could give his £6000 to the other. You cannot both give each son £6000 (for IHT purposes), which is what it sounded like you were thinking.