CHRISTMAS IS A TIME FOR GIVING, A TIME FOR INHERITANCE PLANNING

Aaron-Spencer-Head-of-Private-Client-at-Furley-Page

A lawyer specialising in estate planning says giving cash gifts at Christmas is a perfect way to provide for families, charities and to help reduce inheritance tax at the same time. 

Aaron Spencer, Partner & Head of Private Client at law firm Furley Page, said: “With Christmas just around the corner, many people will be considering giving cash gifts to loved ones instead of braving crowded high street shops. As well as the joy of giving, making over a Christmas cash gift, within certain limits, can also have the added advantage of reducing inheritance tax paid to HM Treasury when you die. 

“Gifts are viewed in a variety of ways for inheritance tax purposes, so it’s important to plan carefully in order to give away money and assets as tax-efficiently as possible. Simply by using your £3,000 per year allowance for 20 years, you can save your loved ones £24,000 in inheritance tax.” 

Supporting a charity  

Charity is often at the forefront of people’s minds over the festive season. Any amount can be given away to a charitable cause without incurring an inheritance tax liability on it. Instead, the value of the estate will be reduced by the amount of money given to charity before any inheritance tax is calculated.   

Small gifts 

You can give as many people as you like small gifts of up to £250 per year without being liable for inheritance tax. Gifts to a spouse or civil partner are exempt from inheritance tax. 

Annual exemption 

Everyone has an annual exemption from inheritance tax (sometimes called the ‘gift allowance’) which allows them to give away assets or cash up to a total of £3,000 per year without incurring inheritance tax. If the gifts collectively are not worth more than £3,000 (or £6,000 for a couple), no inheritance tax will become due.  

Regular gifts from surplus income 

If you have more income than you need, gifts made from surplus income are free from inheritance tax, provided you can show that the gift does not affect your usual standard of living. The ability to make gifts out of excess income can be a useful method of stopping an estate from increasing in value. 

Aaron continued: “The rules surrounding inheritance tax gift exemptions are quite complicated and it is a good idea to seek advice about any aspect of inheritance tax planning. A specialist private client lawyer can advise on how to make gifts most effectively, helping to ensure that relatives do not face an unexpected tax bill in the future.  

“It is also important to keep accurate records of any gifts, which will make it simpler for the executor of the estate to calculate what tax is payable.” 

For more information about Furley Page’s estate planning services, contact Aaron Spencer, email aas@furleypage.co.uk  or call 01227 274241. 

You can also follow the firm on Twitter @furleypage and on LinkedIn.

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