Avoiding Inheritance Tax – How Can I Make Gifts?
In addition to the permitted annual gift of £3000 in any one year, each parent of a couple being married (whether a traditional wedding or a civil partnership) is able to make a gift to the couple of up to £5000, and each grandparent can give £2,500. Otherwise, a wedding guest can make a present of up to £1000.
So, whether your child, grandchild, friend or member of the family is getting married and you have the funds available, consider giving them a gift in the form of money. In these difficult economic times, they will no doubt welcome the additional cash and you will benefit from using your exemptions and avoiding inheritance tax.
Funds, Pensions & ISAs
Grandparents are able to invest up to £3,600 a year into each grandchild’s stakeholder pension until they turn 18.
Existing Child Trust Funds (scrapped by the government in January 2011) can also provide a route for investing funds which will then be placed outside the remit of IHT. Up to £1,200 can be invested in each account annually. These investments are also exempt from any other tax.
Introduced in November 2011, junior ISAs are a valid alternative to Child Trust Funds in that they allow annual investments of up to £3,600. Whereas a child cannot access the funds from their CTF until they are 18, a junior ISA will allow them to manage their account from the age of 16 although again, they may not access the money until they are 18.
To find out how to manage your money effectively now, to avoid your loved ones having to pay a large Inheritance Tax bill after your death, contact a estate planning professional today.