Gifts to the happy couple?14 May 2018
There is much on our website and in our recent client Newsletter about inheritance tax and the possible ways that this liability charged to many estates on death can be reduced.
The statistics for this tax are a little eye watering as to how many millions is collected in inheritance tax (£4,840 million in 2016/2017), and how much extra has been collected (over double) from 2009/2010 to 2016/2017. More can be found here:
Inheritance tax is often resented, with many feeling that this is in some form double taxation, and for those who don't know much about it, they will probably pay close attention when the Chancellor gets his hands on the estate of a loved one who passes away and 40% inheritance tax is paid above the standard nil rate thresholds.
Death and taxes, as I understand Benjamin Franklin noted in 1789, are the only certainties in life. However, many also choose to get married, or join together in a civil ceremony, and there are extra allowances available for gifting funds away on these occasions, whilst also potentially helping to keep the Chancellor away from a bit more of the donor's taxable estate at a future time.
You can reduce the value of your estate for inheritance tax purposes by making gifts, and one type of gift allowance not often referred to (and in addition to the annual £3,000 allowance) is gifts on marriage or a civil ceremony. As examples, a parent can gift away £5,000 to a child on marriage and a grandparent (or great-grandparent) can gift away £2,500. Other parties can gift away £1,000 for a marriage/civil ceremony.
These are just a few notes as to how using current allowances can be effective when family circumstances change, helping the recipient of the gift, and potentially reducing the tax charge of the donor's estate in the future. These are not large gifts in the overall scheme of how much inheritance tax is paid, but they could make a difference in keeping tax charges down.
If you're getting married or having a civil ceremony this year, have a great time on your very special day!
No individual advice is provided during the course of this blog and if you would like to consider this opportunity a stage further then please let the team at Chapters Financial know.
Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899