Lowes Magazine 122

PLANNING

How we help clients

There are some important provisos of which to be aware: the gift must be made on or shortly before the marriage or the registration of the civil partnership; it must be made in contemplation of the marriage or civil partnership; and it is conditional on the marriage or civil partnership taking place. It cannot be made after the marriage ceremony. These figures have not changed since 1984, so are far less valuable than they were – all the more reason we should take advantage of them when we can. There are two general exemptions from IHT, which can also be used to good effect here; the annual exemption and the small gift exemption. The annual exemption allows an individual to gift (to either one person or split between several people) up to a total of £3,000 each tax year, free of inheritance tax. If you do not use your £3,000 annual exemption, you can carry this forward for one tax year. The small gift exemption allows you to gift up to £250 per person (to an unlimited number of people) each tax year. But you cannot use the small gift exemption on top of any other gift to an individual in the tax year. Another useful exemption is to make gifts as part of normal expenditure out of income. This exemption allows you to make a gift out of income you receive as long as it leaves you with sufficient income to maintain your normal standard of living. As there is no maximum amount that can be gifted in this way, it can be very useful, bearing in mind you will need to prove the gift comes from income, is regular and habitual and is not needed for your normal standard of living. These days, making best use of the gifting exemptions available is particularly important given the cost of weddings and civil partnerships, not just in terms of making the day a memorable one but taking steps to avoid a potential and unwelcome inheritance tax bill further down the line. If you or anyone you know needs help with their tax planning around a wedding or civil partnership, or want general financial planning and tax advice, Lowes Advisers are here to help. You can get in touch on 0191 281 8811.

ONE OF THE WAYS WE HELP CLIENTS is in planning for big events in their lives and those of their families, says Lowes Consultant Rob Newton.

Now we appear to be coming out of the worst of the pandemic and the world is returning to some semblance of ‘normal’, many people who have been putting off holding a big event, such as a wedding, will be looking to go ahead with their plans. Weddings are not cheap by any stretch of the imagination and no matter who is paying the bill or contributing to the ‘Big Day’, making financial plans ahead of time is essential. This can also affect inheritance tax (IHT) planning. As unromantic as that may be, it is an area that prudent parents and grandparents need to consider, notably in terms of gifting money to the happy couple. A trend over recent years, with more couples co-habiting and setting up a home together before marriage or civil partnership – and so having all the kettles, toasters and other aspects of home life already sorted – is for the traditional wedding list to be replaced by gifts of cash. It is important to know what gift exemptions and inheritance tax reliefs are available, before making your gift, and what the implications are for money given over and above those amounts. In blanket terms, as long as you live for seven years beyond the date of the gifting, any money given passes out of your estate for inheritance tax purpose. If you die within seven years of making the gift, inheritance tax may be payable on the value of the gift. But there are various reliefs and exemptions that can be used to make the gift IHT free. There are specific amounts which HMRC allows to be gifted to someone who is getting married or entering into a civil partnership. These amounts will depend on your relationship with the recipient. They are: £5,000 to a child. £2,500 to a grandchild or great-grandchild. £1,000 to any other person.

9 Lowes.co.uk