Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available. There are also certain gifts which have capital gains tax (CGT) implications too.
In this series of articles, brought to you by Beavis Morgan, we look at the various options available to you.
Certain gifts can have Capital Gains Tax consequences
Although there will be no CGT on gifts of cash there may be CGT to pay where the gift comprises shares or other assets. This is because the transaction will generally be deemed to take place at market value between connected persons even though no money changes hands.
The amount of the gain would normally be determined by comparing the market value with the original cost of the asset gifted.
Where the amount of this gain is within the annual CGT allowance (currently £11,700) then there would be no CGT payable.
Where the gift comprises shares in a trading company or other business assets it may be possible for donor and recipient to sign an election to hold over the gain so that no CGT is payable by the donor at the time of the gift. The effect of such an election is that the recipient of the asset will take over the donor’s original cost for subsequent disposal. Please get in touch with us if you are considering making gifts of shares or other assets so that we can advise you fully of all the tax implications.
Our tax specialists at Beavis Morgan are available to assist you in keeping the necessary records to satisfy HM Revenue & Customs. For more information, please contact your usual Beavis Morgan Partner.
Other articles in the series:
The IHT annual exemption – use it or lose it!
Gifts out of income are not taken into account for IHT