Inheritance tax allowances

LittleT69

I've been looking online but seem to go round in circles. If I understand correctly, the £3000 gifting allowance can be carried forward one year (giving up to £6000). Can I also use last tax years £250 gifting allowance along with this years, i.e. give £500 to individuals this tax year?

lisyloo

Are you planning on giving this money to them eventually anyway?
What are you trying to acheive?

LittleT69

I am just trying to make use of the allowances and if I'm allowed, I feel, why not use them. Plus I can enjoy seeing them make use of the money rather than it sitting in an account that will eventually go to some of them anyway.

lisyloo

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 



 

LittleT69

Many thanks for the information.
I guess the £250 allowance can't be rolled over to the following tax year As it's not mentioned.
Sorry, it's not mum 

poseidon1

LittleT69 said:

I am just trying to make use of the allowances and if I'm allowed, I feel, why not use them. Plus I can enjoy seeing them make use of the money rather than it sitting in an account that will eventually go to some of them anyway.

To answer your specific question the £3000  gifts allowance can be forward 1 year, the £250 unlimited allowance ( to different people) cannot.

The people you give the £3,000 to  ( or £6,000 for current year if unused in the prior year ) cannot be the same people for the £250 allowance. So for example you could give  £1,500 each to two children but you if you have 4 grandchildren they could get £250 each.

Keep_pedalling

These things are exemptions not allowances, you can gift as much as you like, it jut that anything over them does not fall out of your estate for 7 years. 

Keep_pedalling

lisyloo said:

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 

It only works like that if you gift over your NRB, taper relief does not apply to the first £325k of gifts.

lisyloo

Keep_pedalling said:

lisyloo said:

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 

It only works like that if you gift over your NRB, taper relief does not apply to the first £325k of gifts.

So just to be clear if they are in the Nil rate band, are they Nil?

Keep_pedalling

lisyloo said:

Keep_pedalling said:

lisyloo said:

If it's going to go to them anyway and you don't need to money, then you are better off gifting it as early as possible if your estate is going to fall outside the inheritance tax thresholds (if you're single £325K, if they are your kids £500K).

Inheritance tax works like this

0-3 years 40%
3-4 years 32%
4-5 years 24%
5-6 years 16%
6-7 years 8%
7 or more 0%

If your entire estate is likely to be less than £325K then you don't need to worry about it.
If you have money they will get anyway then logic says, give it to them as early as possible to reduce the bill (records will help them when the time comes).

The way I read the rules you cannot use the £250 in addition to the £3K/£6K on the same person.

How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts - GOV.UK

If you're my mum, then thanks very much mum 

It only works like that if you gift over your NRB, taper relief does not apply to the first £325k of gifts.

So just to be clear if they are in the Nil rate band, are they Nil?

Not sure I understand your question, but to clarify, if I make a gift of £325 that gift remains in my estate for 7 years so if I die 6 years and 364 days later, it will still have used up my entire NRB. If that gift had been £425k taper relief would apply to the additional £100k provided I live for at least 3 years. 

silvercar

For future proofing, we (early 60s) are telling the oldies (mid 80s) to be gifting to our kids (30s) rather than to us.