Rules on gifts of up to £250

[Deleted User]

Albermarle said:

loopauk said:

Thanks everyone for the replies - I was a little confused with the guidance.

So in summary, if my granddad's estate is less than £500k (married, and wants to gift to immediate family only), he could gift right now and there'd be no inheritance tax to pay?

Thanks.

To emphasise the point in another way .

By gifting ( any amount) you can not be liable for more IHT when you die, than you would have been if you had not given the gift.
Gifting can not increase liability to IHT , it can only reduce it if you live 7 years after making the gift. 

Indeed. However the permanent myth is that inheritance tax (or some tax) is payable at the time of the gift - by the recipient. That is the most repeated question in this forum by a distance!

Grumpy_chap

[Deleted User] said:

Indeed. However the permanent myth is that inheritance tax (or some tax) is payable at the time of the gift - by the recipient. That is the most repeated question in this forum by a distance!

I think some consider that it is the recipient that pays the IHT if it becomes due at death.  Rather than the deceased's estate that is liable (from the remainder of the estate).
From any IHT perspective, tax liability for the estate can never be higher by virtue of a past gift having been made.

The consideration that can have a more immediate impact is deprivation of assets (DoA).  In the context of gifts of £250, I suspect this is unlikely to be a material consideration.  Nor is DoA likely to be a material consideration in the case of the individual gifting £5m out of a total £10m.

nigelbb

Jeremy535897 said:

Sea_Shell said:

Jeremy535897 said:

purdyoaten2 said:

kuratowski said:

If we're talking about the small gifts exemption for inheritance tax (IHT), it's £250 per person, per year.  The only time gifts are of interest to HMRC is when somebody dies within 7 years of making them.

If your granddad is trying to plan for IHT, he would do well to consult a professional.

Important to note that if the estate is not sufficiently large to attract inheritance tax, HMRC will still not be interested. 

I just wish I could get my head around why so many believe that there is tax payable on gifts within the U.K. 

Yes, it isn't rational, because those that worry about it focus on cash gifts, whereas taking your adult son and his family for a meal out with you is just as much a gift as cash is.

When you start to think laterally, there are many ways to "gift" without "gifting".


Eg.  How long does a "personal possession" need to be in your possession before you can just "donate" it? 😉

Yes, the value to be used is market value, so as an example, if you want to give someone money to buy a depreciating asset, perhaps buy the asset and then give it away. I always liked the idea of a high stakes poker game with your son winning £1 million off you, but I guess it would be extremely hard to prove it wasn't set up!

Auberon Waugh proposed the cunning wheeze of libelling your heirs. They would sue you but settle out of court for a very large sum by way of completely tax free damages.

Keep_pedalling

Albermarle said:

We still pay for one of our young adult offspring to come on one holiday a year with us. Probably costs not far off £1500.
It never crossed my mind ( until now) that this should be included in the £3K exempt gifts total. Or should it?
I suppose if I gave them £1500 to go on their own holiday that would unequivocally be a gift, but to pay for a family holiday that includes them must be more of a grey area?

This is something we have been doing for a few years now. We book a cottage / villa bigger than we need and invite family and friends to join us. Although we keep records of our gifting we don’t include these as we like to book places for ourselves that have good size secluded gardens which only come with larger properties, so we book them for ourselves any hope a few guests can make it. On one occasion we ended up with just ourselves in a 4 bed cottage.

Sea_Shell

Keep_pedalling said:

Albermarle said:

We still pay for one of our young adult offspring to come on one holiday a year with us. Probably costs not far off £1500.
It never crossed my mind ( until now) that this should be included in the £3K exempt gifts total. Or should it?
I suppose if I gave them £1500 to go on their own holiday that would unequivocally be a gift, but to pay for a family holiday that includes them must be more of a grey area?

This is something we have been doing for a few years now. We book a cottage / villa bigger than we need and invite family and friends to join us. Although we keep records of our gifting we don’t include these as we like to book places for ourselves that have good size secluded gardens which only come with larger properties, so we book them for ourselves any hope a few guests can make it. On one occasion we ended up with just ourselves in a 4 bed cottage.

Now that sounds like a plan.😎

Not sure about the inviting others bit mind 🤣🤣

Keep_pedalling

Sea_Shell said:

Keep_pedalling said:

Albermarle said:

We still pay for one of our young adult offspring to come on one holiday a year with us. Probably costs not far off £1500.
It never crossed my mind ( until now) that this should be included in the £3K exempt gifts total. Or should it?
I suppose if I gave them £1500 to go on their own holiday that would unequivocally be a gift, but to pay for a family holiday that includes them must be more of a grey area?

This is something we have been doing for a few years now. We book a cottage / villa bigger than we need and invite family and friends to join us. Although we keep records of our gifting we don’t include these as we like to book places for ourselves that have good size secluded gardens which only come with larger properties, so we book them for ourselves any hope a few guests can make it. On one occasion we ended up with just ourselves in a 4 bed cottage.

Now that sounds like a plan.😎

Not sure about the inviting others bit mind 🤣🤣

I know what you mean, looks like we will be entertaining three exhausting grandsons in July, we will need another holiday to get over it