Everyone is allowed to give away money every year with that amount immediately leaving their estate and no longer being liable for inheritance tax.
A number of different gifts are allowed:
• £3,000 – This is your annual exemption. You can give anything up to this amount away every tax year.
• Up to £250 – You can also give away as many gifts of up to £250, as long as it doesn’t go to someone who has already benefited from a gift out of your annual exemption.
• £1,000 – When someone gets married or enters a civil partnership, you can give them up to £1,000 (£2,500 if they are your grandchild or great-grandchild, and £5,000 for a child).
• Gifts out of income – You can give away regular gifts out of your income as long as it doesn’t affect your standard of living.
• Living costs – You can make payments to help with an elderly relative’s living costs or a child under 18.
Other tax allowances you need to know for 2019/20
|Tax allowance||2018/19 rate||2019/20 rate|
|Higher income tax band||£46,351 to £150,000||£50,001 to £150,000|
|Pension annual allowance||£40,000||£40,000|
|Pension lifetime allowance||£1,030,000||£1,055,000|
|Inheritance tax (IHT) nil-rate band||£325,000||£325,000|
|IHT residence nil-rate band||£125,000||£150,000|
Moneywise.co.uk, 11 March 2019
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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