Chapter 7 - Gifts
To be effective for IHT a gift must be outright, which means that you must be able to afford to make it. Provided you can afford it:
- Give away £3,000 (each for a couple); and if you didn’t make a gift last year, give away £6,000 this year and £3,000 a year thereafter.
- Give away any number of smaller gifts of £250 per recipient (you can’t give £250 to someone who has already had all or part of your £3,000 annual exemption or give more than £250 to anyone).
- Make a gift on marriage up to the limits mentioned in Chapter 3.
Even a dying person can engage in this simple planning by making “deathbed” gifts, and save £1,200 or £2,400.
If you have an income which exceeds your outgoings, you can give away the surplus as well as the £3,000 annual limit. If you want to use this exemption, make sure you record the gift and make sure you have some evidence of your intention to make it regular. For example write to the recipient to express your intention. Also, record your income and outgoings in the format set out on HMRC form IHT 403 (P6), available on the HMRC website.
Other ideas include paying into pension plans for children or grandchildren (see Chapter 14 for more information).
Remember that if you set up a whole of life or gift inter vivos insurance and put it in trust, the premiums you pay are gifts and they reduce the available annual exemptions.
