⚠️ Heads up, folks! A shake-up might be on the horizon for inheritance tax rules, as Labour’s Chancellor, Rachel Reeves, is expected to zero in on a “little-known” loophole. This rule currently lets UK families gift unlimited amounts to each other tax-free. However, changes could be in store with the upcoming autumn budget.
Right now, routine gifts from your surplus income can dodge inheritance tax (IHT) charges. Transfers between spouses are generally exempt, but there’s a twist if your partner hasn’t lived in the UK for at least 10 of the past 20 years.
To keep gifts tax-free, they must be from regular earnings, not savings, and need to be a part of your ongoing expenses. Sean McCann, a financial planner at NFU Mutual, points out that while these gifts face no immediate cap, they could soon catch the Chancellor’s eye. “Regular gifts are more likely to meet the criteria, even if the giver passes away shortly after,” says McCann. It’s smart to send a note with your first gift indicating it’s part of a planned series and keep it with your will.
Stay savvy and keep an eye on this space for updates! 💰✨