How to Give Money Away and Cut Inheritance Tax (Part 3)

How to give money away and pay less inheritance tax. Here's Part 3 of my inheritance tax series, from an accountant. Gifting is one of the simplest ways to reduce the bill, but only if you plan ahead.

1. The £3,000 annual exemption. You can give away £3,000 every tax year, completely free of inheritance tax, and it leaves your estate immediately. If you did not use last year's allowance, you can carry it forward one year, so up to £6,000 in one go.

2. Small gifts. On top of that, you can give £250 to as many different people as you like each year, just not to someone who has already had part of your £3,000.

3. Bigger gifts and the 7-year rule. Larger gifts to individuals become completely tax-free if you survive seven years. Die within seven years and they count back against your estate. And taper relief is widely misunderstood: it only reduces the tax on gifts above the £325,000 allowance, so for most ordinary gifts it does nothing and the gift still counts in full.

4. Gifts from income, the rule almost nobody uses. You can give away unlimited amounts, regularly, from your surplus income, with no seven-year wait, as long as it is regular, comes from income rather than savings, and does not affect your standard of living. Keep written records.

One warning: gifting assets like property or shares can trigger capital gains tax, so get advice first.

This is Part 3 of the series. I'm Afshin, an ACCA qualified accountant making UK personal finance and money tips simple. Subscribe and follow the series.

This is general information and education, not financial advice. For your own situation, speak to a financial adviser or solicitor.

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Видео How to Give Money Away and Cut Inheritance Tax (Part 3) канала Finance with Afshin