Questions about the £3,000 Gift Allowance

throneofblood

Hi,

If I give £3,000 to someone (or someone gives me £3,000) in a tax year are there any tax implications for either the person who gifts or the person who receives the gift?

Similarly, if someone receives two gifts of £3,000 from two different people are there any tax implications for either the gifters or the recipient?

Thanks in advance.

sheramber

Are the grifters’ estates liable to IHT?

DullGreyGuy

throneofblood said:

Hi,

If I give £3,000 to someone (or someone gives me £3,000) in a tax year are there any tax implications for either the person who gifts or the person who receives the gift?

Similarly, if someone receives two gifts of £3,000 from two different people are there any tax implications for either the gifters or the recipient?

Thanks in advance.

You can give whatever gifts you want to whoever you want. Assuming it's one private individual to another there are no immediate tax liabilities no matter how much you give/receive. Obv if its a gift from an employer to employee it's a different matter. 

If the giver of the gift however dies within 7 years of making the gift then a proportion of it will still be considered part of their estate for calculating IHT, the longer ago it was the smaller the percentage. IHT is paid by the estate and so in most cases the recipient is unaffected by the matter however if the person had given away so much that their estate is insolvent its at that point that HMRC can look to the gift recipients to recover the tax from the gifts. 

Keep_pedalling

sheramber said:

Are the grifters’ estates liable to IHT?

Hopefully you meant givers 😆

The £3k is an exemption not an allowance. If you gift up to £3k then that gifts falls outside your estate immediately. Any amount over that a potentially   exempt gift (PET) and won’t fall out for 7 years. There is no tax liability on those receiving the gift unless the giver has given away more than £325k and dies within the 7 years.

Giving never negatively impacts the amount of IHT someone’s estate may need to pay, at worst the estate will pay the same amount as it would have done if the gift had not been made.

Albermarle

DullGreyGuy said:

throneofblood said:

Hi,

If I give £3,000 to someone (or someone gives me £3,000) in a tax year are there any tax implications for either the person who gifts or the person who receives the gift?

Similarly, if someone receives two gifts of £3,000 from two different people are there any tax implications for either the gifters or the recipient?

Thanks in advance.

You can give whatever gifts you want to whoever you want. Assuming it's one private individual to another there are no immediate tax liabilities no matter how much you give/receive. Obv if its a gift from an employer to employee it's a different matter. 

If the giver of the gift however dies within 7 years of making the gift then a proportion of it will still be considered part of their estate for calculating IHT, the longer ago it was the smaller the percentage. IHT is paid by the estate and so in most cases the recipient is unaffected by the matter however if the person had given away so much that their estate is insolvent its at that point that HMRC can look to the gift recipients to recover the tax from the gifts. 

AIUI the taper only applies to very large gifts and the amount above the givers nil rate band.
For a 'normal' size gift ( say £25K) if the donor dies after 6 years and 11 months , then 100% will be counted back into the estate for the IHT calculation.