Annual gift exemption in the UK, what is it?
In the United Kingdom, the annual gift exemption allows individuals to give gifts of up to a certain value each tax year without incurring any inheritance tax (IHT) liability. The annual gift exemption in the UK is £3,000 per person per tax year.
Here’s an example to illustrate how the annual gift exemption works:
Let’s say you are a parent with two children, and you want to give each of them a financial gift within the annual gift exemption limit. You can give each child up to £3,000 in a tax year without triggering any inheritance tax implications.
So, if you decide to gift £3,000 to each of your children in the current tax year, the total amount you can give away without incurring any inheritance tax liability would be:
£3,000 (gift to child 1) + £3,000 (gift to child 2) = £6,000
This means you can give away a total of £6,000 in financial gifts to your children in the current tax year, utilising the annual gift exemption fully.
It’s important to note that any unused portion of the annual gift exemption cannot be carried forward to subsequent tax years. Additionally, gifts exceeding the annual exemption limit may be subject to inheritance tax if they exceed the available exemptions and allowances or fall outside other exemptions, such as those for gifts on marriage or gifts to charities.
For personalised advice tailored to your specific circumstances and comprehensive estate planning solutions, it is recommended to consult with a professional legal service such as Westfield Wills. Their team of experienced solicitors specialises in will writing, estate planning, and inheritance tax mitigation strategies. By seeking guidance from Westfield Wills, you can benefit from their expertise in navigating the complexities of UK inheritance tax laws and ensuring that your estate planning objectives are met effectively. Whether you require assistance with drafting a will, establishing trusts, or minimising inheritance tax liabilities, Westfield Wills can provide you with the expertise and support needed to safeguard your assets and protect your children’s inheritance. Contact Westfield Wills today for expert advice and peace of mind regarding your estate planning needs.
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