Giving money to our adult children

hayesgirl

Hubby and I are selling up and downsizing.  The result of this is that we would like to give our three daughters some cash each now.  They all have car loans/finance that we would like to be able to clear for them, to make their individual monthly outgoings less, especially during these very difficult times.  I think I read online that we can give them £3000 each per year?  So can I give them £3000 each and hubby give them £3000 each as well?  I also think I read something about being able to give a £5000 wedding gift?  Two of our daughters got married last year, one in July 2019 and the other in August 2020?  So can we still give them a wedding gift each as well?  Are there any other ways that we can give money to our daughters tax free?  One of our daughters has just had her first child?  Can we give money to grandchildren tax free and if so how much please?  thanks

Jeremy535897

This is a request for inheritance tax 101. In short:

• each of you and your husband can give £3,000 a year in total, not per donee, exempt from IHT. If you didn't do it last tax year (to 5 April), you can give away £6,000 this tax year
• gifts of £250 or less in total per donee per tax year are exempt so long as other exemptions have not been used for that person
• gifts in consideration of marriage need to be on or before the marriage. See https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14191
• gifts to grandchildren can be more effective for income tax and IHT purposes than gifts to children

For some more information, see https://www.gov.uk/inheritance-tax/gifts

Outright gifts to individuals not covered by exemptions can only be subject to IHT if the donor dies within seven years of making the gift. Non-exempt gifts in that period totalling up to £325,000 will not be chargeable to IHT, but will reduce the nil rate band available on death.

comeandgo

Are you likely to be in the inheritance tax values?  If not you can give them whatever you want with no tax involvement.  

Keep_pedalling

You can give them as much as you like, the limits you have read about are simply the amount you can give away that do not fall within the 7 year rule for IHT. As a married couple with children your joint estates would need to exceed £1M for you to need to worry about IHT. If that is the case then some form of IHT planning should be considered.

macman

You can also gift regular amounts out of surplus income (not capital).

hayesgirl

Our joint estate is under £500k. 
So does that mean we can give them whatever we want tax free, as we are below the IHT rules?
Or as we did not give any money to them last year, tgat actually hubby and I can only actually give them £6000 each tax free this year?

Jeremy535897

In your circumstances, you don't need to worry about inheritance tax. If you give away chargeable assets as opposed to cash, capital gains tax might be an issue.

Mojisola

lisahayes said:

Our joint estate is under £500k. 
So does that mean we can give them whatever we want tax free, as we are below the IHT rules?

Yes. 

The only thing worth keeping in mind is deprivation of assets regarding any care either of you may need in the future.

oldbikebloke

lisahayes said:

Our joint estate is under £500k. 
So does that mean we can give them whatever we want tax free, as we are below the IHT rules?
Or as we did not give any money to them last year, tgat actually hubby and I can only actually give them £6000 each tax free this year?

so your questions are utterly irrelevant then as neither you nor husband's estates will face (current rules!) any inheritance tax. Therefore how you give away your cash is irrelevant except for deprivation of assets should either one of you end up in a council means tested care home 

Note - if you give away assets subject to CGT (ie NOT cash) the situation may be different with respect to your exposure to paying Capital Gains Tax  

unkle

I'd always be careful of saying you have nothing to worry about, as whatever the current IHT rules and allowances are today they could change, almost at any point.

oldbikebloke

unkle said:

I'd always be careful of saying you have nothing to worry about, as whatever the current IHT rules and allowances are today they could change, almost at any point.

and your crystal ball says.....?
tax planning is about the now, not soothsayer predictions