Unlike the other exemptions discussed above, which are available in respect of lifetime gifts, this exemption is available both in respect of gifts made in the lifetime and upon death. Business Property Relief/Agricultural Property Relief If you are a business and/or farm owner, there are specific reliefs on gifts of business/ agricultural property up to 100%. This is considered one of the most valuable reliefs when gifting assets to the next generation. Please note, there may be other tax consequences which need to be considered. Gifts into trust We are also able to consider placing assets into certain types of trusts so that the growth of that particular asset will grow outside of the estate. Unlike gifts to individuals, gifts into trust are (with some exceptions) subject to an immediate charge to IHT if the gift to the trust exceeds your available NRB. If you do not survive seven years from making the gift, an additional 20% will become payable. As Ivar Sala notes ‘Often the best approach is doing a bit of everything. Estate planning is a complex area and there is a wide range of solutions for clients in different circumstances. However, if this is left too late, then the options start reducing, for example, as health starts to deteriorate.’ This overview of IHT on lifetime giving has dealt only with the possible IHT reliefs available. You should be aware that making gifts may have consequences relating to other taxes such as Capital Gains Tax, Stamp Duty Land Tax, Income Tax etc. Therefore, tax advice should be sought before making any gifts. There are many legalities and tax rules which need to be abided by to ensure this works correctly for you and in the manner which you would like.
There are no limits to the gifts out of your income and this can be a very useful exemption for those with surplus income. Maintenance to the family Any gifts made for maintenance of a spouse, child or dependant relative are disregarded for IHT. It must also be noted that the maintenance of family ‘disregard’ is not restricted to income so payments of capital may also be disregarded. Again this exception is subject to the gifts ticking the right boxes.
Annual Exemption You have an exempt amount for IHT
purposes which is currently £3,000 and is an annual exemption available for lifetime gifts. It is applied in a strict time order against the gifts in a tax year and £3,000 is the total you may make for the entire tax year. You are able to carry forward unused allowance from the previous tax year but the rules require that the current year’s annual exempt amount must be used first. Small gifts - £250 This exemption is £250 per recipient per tax year. This cannot be used in conjunction with the £3,000 annual exemption mentioned above but there is no limit to the number of individual donees who can benefit. Gifts on marriage/civil partnership These are gifts made in consideration of marriage or registration of a civil partnership and therefore must be made on or before but never after the event. The exemption is limited, and the amount is dependent on the relationship that you have with the person who is getting married. For example, you can give away £5,000 if you’re a parent of either party to the marriage. Parents can therefore give up to £10,000 free of IHT on the occasion of their child’s marriage/civil partnership. Gifts to Civil Partner/Spouse A gift is generally exempt if it is between registered legal partners (spouses or civil partners). The exemption does not apply, however, if the giving spouse is domiciled in England and the recipient is domiciled in another jurisdiction.
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