🚨 Heads up! Potential Changes to Tax-Free Gifts 🚨
There might be a shake-up in how we gift cash to family members without getting taxed. Labour Chancellor Rachel Reeves is reportedly eyeing a little-known rule that lets families give unlimited sums without inheritance tax. Right now, if you give regular gifts out of your income, they’re often exempt from inheritance tax (IHT). But this could soon be a thing of the past!
Currently, regular gifts from excess income can dodge IHT, as long as these gifts don’t dip into your savings or impact your regular lifestyle. Transfers between married couples are usually tax-free, except in cases where one partner has lived in the UK for less than ten years over the last twenty.
Experts advise tracking your gifts to save your beneficiaries from a paperwork nightmare. Gifts to spouses, civil partners or charities are always tax-free, but Sean McCann from NFU Mutual warns that the current rules might change. He suggests this loophole could be closed in the next budget.
Thinking of gifting money for weddings, birthdays, or Christmas? As it stands, you can give up to £3,000 a year and unlimited small gifts up to £250 per person tax-free. Wedding gifts also qualify for exemptions depending on your relationship with the couple.
But hold on, there’s a catch: if you pass away within seven years of giving a large gift, it might still be subject to IHT on a sliding scale, up to 40% in the first three years!
Why not send a note with your first gift to your loved ones, announcing your intention to make regular gifts? Keep a copy with your will to ensure everything is crystal clear. 🎁
It’s the perfect time to review your gifting strategies and stay ahead of any changes. Consult a financial planner to ensure your gifts are as tax-efficient as possible! 💷✨