There are several reasons for giving a gift to a grandchildren; helping them to buy their first car, pay for university fees, get onto the property ladder or get married.
Lifetime gifts are an important part of inheritance tax planning and can be an effective way of reducing the amount chargeable to inheritance tax upon death. The current inheritance tax threshold is £325,000. If your estate, or share of a joint estate, is less than the threshold then there will be no inheritance tax to pay. If it is worth more than the threshold, then tax may be payable on any gifts you have made.
Certain gifts are exempt of inheritance tax. For example, you can, in each tax year, currently gift a total of £3,000 without this being added back to your estate upon death. If the exemption is unused then, this can also be carried forward to the next year; but only for one year.
You can make an absolute gift of capital of any amount, called a potentially exempt transfer, and if you survive seven years from the date of the gift the value will fall outside your estate for inheritance tax purposes. However, it is important to bear in mind that the value of the gift will be added back to your estate if you fail to survive the seven year period.
If you have any questions Beers’ friendly and helpful team is always willing to help and are happy to hear from you. Simply contact us on 01548 857000 and 01752 246000, or look at our website www.beersllp.com.