The Institute of Chartered Accountants in England and Wales (ICAEW) has recently issued a reminder to anyone attending a wedding (or civil ceremony) and planning to give a cash gift on the tax position for the happy couple. The gift will be exempt from Inheritance Tax (IHT) once the gift is made on or shortly before the date of the wedding or civil partnership ceremony.
The amount of tax relief varies depending on the relationship between the donor and the recipient.
- Each Parent (including Step-Parents) can gift up to £5,000 tax-free.
- Grandparents and Great Grandparents can each gift up to £2,500.
- Any other person can each gift up to £1,000
It is also useful to know that £3,000 worth of gifts can be given each tax year, known as an annual exemption. Any unused part of the annual exemption can be carried forward to the next tax year.
There are also exemptions for normal gifts out of income such as making birthday gifts. The rules allow, for example, a grandparent to give a grandchild a birthday and wedding gift in the same year. You can also give as many 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.
Married couples should also note that there is no IHT to pay on lifetime gifts between spouses or civil partners as long as they live permanently in the UK.
If you would like any advice on cash gifts, please do not hesitate to contact Folkes Worton on 01384 376964
Folkes Worton – Accounting for the Future