Inheritance Tax exemptions

G_M

The HMRC website lists several catagories of exempt gifts:

Wedding gifts

There’s no Inheritance Tax on a gift that was a wedding or civil partnership gift worth up to:

• £5,000 to a child
• £2,500 to a grandchild or great-grandchild
• £1,000 to anyone else

The gift must be given on or shortly before the date of the wedding or civil partnership ceremony.

Gifts up to £250

There’s no Inheritance Tax on individual gifts worth up to £250 - unless in the same tax year the deceased gave the same person:

• more than £250 worth of gifts
• other gifts that are free from Inheritance Tax, eg a wedding gift or a gift that counts towards their £3,000 annual exemption

Regular gifts from the giver’s income

There’s no Inheritance Tax on gifts from the deceased’s income (after they paid tax) as long as the deceased had enough money to maintain their normal lifestyle. The gifts include:

• Christmas, birthday and wedding or civil partnership anniversary presents
• life insurance policy premiums
• regular payments into a savings account

Are these mutually exclusive?

Specifically, if the (soon to be) deceased had gaven £250 to person A as a one off 'up to £250' gift, could they still give a 'Regular' gift at Christmas as they usually do?

G6JNS

G_M wrote: »

The HMRC website lists several catagories of exempt gifts:

Are these mutually exclusive?

Specifically, if the (soon to be) deceased had gaven £250 to person A as a one off 'up to £250' gift, could they still give a 'Regular' gift at Christmas as they usually do?

AIUI, and if there is then somebody will now shoot me down in flames, there would be no problem. If there is then I am in the mire! What HMR&C are really interested in is people seriously taking the micky.

Savvy_Sue

If it helps, I'm with G6JNS ...

Crabapple

Those types of gifts should be fine. I guess unless the Christmas gift was a huge amount of cash...

If you have a taxable Estate HMRC request a lot of information about gifts, particularly if you are claiming gifts out of income to show that there was surplus money available to make them.

Realistically the people that cash gifts are going to are likely to be the immediate family so very likely to be the same as those you would buy Christmas and birthday gifts for!

getmore4less

Pragmatic approach needed HMRC do no expect executors to trawl through 7 years of statements looking for every gift.

If there a signs that there has been a significant reduction in assets they may take an interest if there is IHT due.

Only worth bothering with detailed records of gifts that reduce asset base if assets are over nil rate band.

If you start buying multi £k gifts that can't be covered from income time to keep some records for your executor.