14th September 2017
An increasing amount of older people are giving away early inheritance gifts to younger relatives, according to research.
Financial services provider Retirement Advantage polled 1,005 over-50s and found 39% have passed on 'living inheritance gifts' to their children or grandchildren in the last six 6 months.
The top 5 reasons for passing on gifts early were:
- birthdays (25%)
- university (23%)
- general loans (22%)
- paying off debts (19%)
- house deposit (18%).
Small gifts, such as Christmas or birthday presents, worth less than £3,000 can be passed on to relatives tax-free each year.
This is known as the annual exemption, which can be carried over to the following tax year - but for 1 year only.
You can also gift £1,000 towards weddings or civil ceremonies, £2,500 to grandchildren or great-grandchildren and £5,000 to a child in the same tax year.
Andrew Tuffy, pensions technical director at Retirement Advantage, said:
"Living inheritances are clearly helping out cash-strapped children and grandchildren who may be struggling with the day-to-day cost of living.
"There are some simple rules to remember when gifting which should ensure you don't fall foul of the taxman."
Contact us to talk about planning your finances.