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Save Tax - Give Cash for Christmas- 30/11/2009
Giving cash as a Christmas present to children, grandchildren, and other relatives or friends, will not only spread a lot of happiness, but can help reduce the tax bill too, according to a leading Shropshire solicitor specialising in inheritance tax, wills, trusts and estate planning.
Jane Hughes, a partner in the Wills, Trusts and Estate Planning Department in Shropshire law firm FBC Manby Bowdler LLP, says that the festive season is an excellent time for reducing the liability for Inheritance Tax (IHT) by handing over money as presents.
She says: “Cash gifts of up to £250 to as many people as you like and up to £3,000 to one person are exempt from Inheritance Tax.
“For people who think their estates will be affected by IHT, this is a particularly useful way of passing on part of an inheritance, which they plan to leave to their relations anyway, while saving tax.
“For example there would be a tax saving of £12,000 on £3,000 given away every year for ten years. Of course, presents can be made by both husband and wife, doubling the amounts passed on and tax savings made,” explains Mrs Hughes, who is based in FBC Manby Bowdler’s Shrewsbury office.
“Regular gifts made out of your after-tax income are also exempt from Inheritance Tax, if you have enough income left after making them to maintain your normal lifestyle, and there are also special rules for Wedding and civil partnership ceremony gifts, which allow greater sums to be given away.
“Inheritance tax can be complex, but Christmas seems like an excellent opportunity to take a look at it and start reducing any liability,” concludes Mrs Hughes.
FBC Manby Bowdler provides advice on inheritance tax, wills, trusts, estates and all other legal matters from its offices in Shrewsbury, Telford, Bridgnorth, Wolverhampton and Willenhall.