What’s the deadline for making cash gifts?
We wanted to remind you of the inheritance tax (IHT) implications of making cash gifts during the 2023-24 tax year ending on April 5, 2024.
How much can I give away? Without paying IHT
You can give away up to £3,000 worth of gifts each tax year without them being added to the value of your estate. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you did not make any cash gifts in 2022-23, you could gift up to £6,000 this tax year.
If you do have any unused annual exemption this can be carried over to the next tax year. However, this must be used within the next tax year. As an example, if you have an unused annual exemption from the tax year 2022/23, you can carry it over to 2023/24, but it then won't be carried over to 2024/25.
IHT on gifts for Weddings or Civil partnerships
If someone within your family or someone you know you are able to give them a tax free gift. the allowances change depending on who the gift is for.
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Your able to gift up to £5,000 to a child.
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If you want to give a grandchild or great-grandchild you’re able to gift £2,500
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If you want to gift to anyone else your marriage allowance is £1,000
If you are planning on gifting a newly married couple money but you want to gift them more than the marriage allowance, you are able to combine your wedding/civil partnership allowance to any other Inheritance tax allowance with the exception of the small gift allowance (see below).
IHT Exemptions made from your income.
There are also generous exemptions of inheritance tax for normal gifts made out of your income, but you must be able to maintain your standard of living after making the gift.
Small gift allowance
In the UK, you are permitted to give a certain amount of gifts each year without having to pay any taxes, including inheritance tax. In addition to the £3,000 annual exemption in total each tax year explained above, you can also give as many small gifts of up to £250 per person as you want during the tax year, but only if you have not already used another exemption on the same person. These small gifts are also exempt from inheritance tax.
Shall I keep records of my gifts?
It's important to note that there is no inheritance tax on lifetime gifts between you and your spouse or civil partner if you both permanently reside in the UK. However, if you make any other gifts outside the aforementioned limits, they will count towards the total value of your estate and should be carefully considered. It's important to keep track of the gifts you make each year and who they were made to, as this information will be needed when calculating the value of your estate for inheritance tax purposes.
Contact Us
If you're looking to utilise the remainder of your IHT gift allowance for 2023-24 before the deadline of the 5th of April, please contact a member of our specialist tax team who can help you make the most from your IHT allowance.