What is the maximum tax free gift allowable?
Answered by: Lesley Stalker, Robert James Partnership
You can make gifts worth up to £3,000 in total in a single tax year and these will be exempt from inheritance tax. There is potential to carry over any unused portion of this annual allowance to the following tax year. Small gifts to the value of £250 can be made to as many people as you wish in a single year.
There are other tax-exempt gifts such as wedding or civil partnership gifts, which can take the form of cash or gift items. Parents of the happy couple are entitled to give away £5,000 each; grandparents and great grandparents can gift £2,500 each and other individuals can give up to £1,000. To qualify you need to make the gift on or shortly before the ceremony, and the gift needs to actually take place or the tax exemption is nullified.
For much higher value gifts, there is also the lifetime gift allowance which, providing the qualifying conditions are met, enables an individual to make a substantial gift, a house for instance, which may exceed the threshold for inheritance tax. Provided the giver survives for 7 years after making the gift, no further tax is payable. Take care however when gifting assets that the gift does not give rise to a capital gains tax charge.