Tax Advice: The IHT annual exemption – use it or lose it!

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.

 The IHT annual exemption

Although not particularly generous at £3,000 per donor per annum, if this annual IHT exemption is not used by 5 April it is lost. It is however possible to carry the allowance forward one year if unused. This means that if the annual allowance for 2017/18 was not used, an individual may make gifts of up to £6,000 in 2018/19.

Any number of gifts of up to £250 per person per tax year are exempt from Inheritance Tax. Where the gifts to individuals exceed the annual exemption, there may still be no inheritance tax to pay if they survive for 7 years following the gift or the gift falls within the £325,000 nil rate band.

Whether you are looking to save on capital gains tax, income tax, inheritance tax, or all three, there are various legitimate tax planning opportunities available to you.

For more information, please contact your usual Beavis Morgan Partner.