Cash for Christmas?
Cash is a much appreciated gift which can also benefit your tax planning!
In the build up to Christmas and for the next in our series of "Life Matters" articles, Paula Shea from Lester Aldridge proposes how giving cash as Christmas Presents could be a sensible tax planning option as well as a much appreciated gift which also saves on shopping time - especially if you're not feeling up to joining in the fray this year. Beautifully wrapped cash can even look very special too!
Life Matters for Lymington, with Paula from Lester Aldridge
"Following on from last month’s article I wanted to offer some thoughts in relation to further planning.
The year has almost disappeared and before long, Christmas will be upon us. Commerciality has overtaken the true meaning of Christmas and we are under more pressure than ever to come up with imaginative gifts for family members.
One simple solution to the conundrum of what to buy is to consider giving cash. There aren’t many recipients who won’t appreciate it!
As well as saving hours of shopping time you may also save your estate and ultimately your intended beneficiaries some Inheritance Tax.
There are a number of Inheritance Tax exemptions available including:
Lifetime gifts of up to £250
Lifetime gifts of up to £250 to any one individual during a tax year are exempt from Inheritance Tax. The exemption is only available if the gift (or gifts) to that individual does not exceed £250 in total.
Lifetime gifts of any amount
Lifetime gifts of any amount are exempt if they form part of the individual’s normal expenditure out of (after tax) income, provided that the donor is left with sufficient income to maintain his usual standard of living. A regular pattern of giving is required, for example meeting annual school fees for a grandchild or paying the premiums on a life policy for another's benefit. The first gift in a series can qualify, provided further gifts are intended.
If the donor dies before making the second gift, there must be sufficient evidence that he intended to make a series of gifts
Lifetime gifts (which do not fall into any other exemption) are exempt up to £3,000 a year. If the annual exemption is (wholly or partly) unused for a particular tax year, the unused portion may be carried forward for one tax year only.
(I know this can all start to sound complicated - I can explain what it means if you contact me for a confidential discussion as below!)
Gifts to charities
Christmas can also be a time of reflection and an opportunity to think about those who are less fortunate than ourselves. Outright gifts to UK, EU and Norwegian, Icelandic and Liechtenstein charities are exempt from Inheritance Tax.
By undertaking this simple planning, and avoiding the stresses of Christmas shopping, you will also reduce the burden of Inheritance Tax on your estate going forward.
Rather a win win all round I'd say!"
Free consultation with Paula
Paula is well aware that you need to be able to trust in the person with whom you share your confidential information. Which is why as Partner with Lester Aldridge who looks after probate, wills and estates, she is happy to offer a totally free and no commitment initial consultation. This meeting can take place in person at your home or the Lester Aldridge offices in Bournemouth, or on the phone as preferred. You can talk over the specifics of your situation with Paula, and take things from there.
For more information about Lester Aldridge Solicitors click here
Life Matters for Lymington with Paula at Lester Aldridge, November 2018