For Inheritance Tax (IHT) purposes, you can give away up to £3,000 worth of gifts each tax year. This is known as your annual exemption. Any unused part of the annual exemption can be carried forward, but only for one year. So, if you didn’t make any cash gifts in 2021-22, you could gift up to £6,000 this year.

There are also generous IHT exemptions for regular gifts made out of your income, but you must be able to maintain your standard of living after making the gift(s). There are also reliefs available for wedding gifts, the amount of tax relief varies depending on the relationship between the donor and the recipient.

You can also give as many small gifts of up to £250 per person as you want during the tax year but only if you haven’t used another exemption on the same person. There is no IHT to pay on lifetime gifts between you and your spouse or civil partner as long as you both live permanently in the UK. Other gifts, outside these parameters, count towards the value of your estate and should be carefully considered.

Source:| HMRC 9/11/2022| 09-11-2022