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November / a time for giving…or at least thinking about it!

25 November 2022

December 2022 will see the first King Charles III minted coins reach public circulation as the tills ring with Christmas present purchases. I remember as a child seeing new coins reaching my pocket for the first time and admiring the shiny new unit of currency before me. Perhaps my first introduction to economics and all things financial, and it is acknowledged by many that the earlier you understand money and its workings, the better.

With the Budget now behind us, we are over halfway through the current tax year (2022-2023), and as the nights now draw in, some will sensibly be looking at their money planning, particularly with the usually expensive month of December ahead. Indeed, in our experience, November is normally our busiest month of the year as people get their finances in order, look to use their tax allowances (such as ISAs and pensions), and also to look at making gifts to the family in the next 6-7 weeks or so.

What can you gift, and how does it save inheritance tax?

Inheritance tax is usually a very emotive issue and if your estate is likely to be subject to tax, you might want to take your own legal advice for your circumstances. Please do make a Will and make sure it is up to date.

Recent research by one wealth manager noted that seven out of 10 people said that they had already given money to their children to help them through the difficult times we are all facing or were planning to pass money to them early.

  • Each person can give away £3,000 in a tax year. If they did not use last year's allowance, they can go back one year and gift away £6,000 in total. It's usually best to document this gifting in a letter to make sure that it's clear that the donor is using this annual allowance. The gift should fall outside the estate from the date it is made.
  • Your spouse / partner can also do the same, so if affordable, you can be very generous, as well as being efficient for inheritance tax planning.
  • As an additional note, don't forget that children and grandchildren can have pensions. Many grandparents like this idea, although if they turn up on Christmas Day with a pension policy, the recipient might not be best pleased. However, a pension needs money and time, and grandchildren usually have a lot of time before they can get hold of their pension!

The festive season, or the thought of it, is usually a time to think about family, friends, and helping out where affordable. This has certainly been highlighted this year with the cost-of-living crisis, and the divide between those that are comfortable, and those that are struggling.

If you would like to review your money and gifting plans, particularly when considering inheritance tax planning, then please contact the team at the office in Guildford.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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