Tax efficient gift-giving can be an essential aspect of estate planning that can significantly reduce your inheritance tax liabilities while benefiting your loved ones. By carefully planning and utilising the available allowances and exemptions, you can ensure that more of your wealth passes on to your family and less is lost to taxes. At our practice, we believe that understanding the rules around gift-giving is key to making informed decisions.
The current UK tax rules provide several ways to give gifts without incurring immediate tax liabilities. However, these gifts’ timing, structure and documentation are vital to ensuring they remain tax efficient. As of the 2024/25 tax year, IHT is charged at 40% on estates above the nil-rate band, which remains at £325,000, there is also a ‘residence nil rate band’ of £175,000 per person, subject to certain restrictions. Properly planned gifts can reduce the taxable value of your estate, potentially saving your beneficiaries a significant amount in IHT
Tax efficient gift-giving is essential to estate planning, allowing you to pass on your wealth while minimising tax liabilities. By understanding the available allowances and exemptions, keeping accurate records and seeking professional advice when needed, you can ensure that your gifts are both generous and tax efficient.
Gifting property, shares or other high-value assets can have significant tax implications, particularly with respect to capital gains tax (CGT). When you gift an asset that has increased in value since you acquired it, you may be liable for CGT on the gain.
However, there are strategies to minimise CGT liabilities when making such gifts. For example, you could transfer assets that have not appreciated significantly or utilise the CGT annual exemption, which allows you to make gains of up to £3,000 without incurring CGT for the 2024/25 tax year.
Our firm specialises in helping clients navigate the rules around gift-giving and estate planning. We can work with you to develop a personalised strategy that maximises the tax benefits of your gifts while ensuring that your wealth is preserved for your loved ones.
Whether you’re looking to make small gifts to family members, transfer high-value assets or set up a trust, we’re here to help. Contact us today to discuss your estate planning needs and learn how we can help you and future generations.