Latimer Hinks Solicitorssays that Christmas and New Year can be the ideal time to give a monetary gift that will also help to off-set the financial pain of Inheritance Tax (IHT.)
While the festive season is not the best time for morbid thoughts about the so-called death tax, taking the time to go to do a financial health-check focusing on IHT could save much anguish in future.
Natalie Palmer, Solicitor Partner at Latimer Hinks, said: "This time of year is the perfect time to give a generous monetary gift to help cash-strapped children, grandchildren or other relatives out.
"You can give away £3,000 per annum - or £6,000 if you have not used the £3,000 allowance in the previous tax year - and this will not be taken into account on your death. Anyone can give £250 away to anyone by way of the small gifts annual allowance. Perhaps the most useful rule is that regular cash gifts out of surplus income will not be taken into account when you die.
"If, for example, you receive £1,000 per month income surplus to your needs, you may like to transfer that £1,000 to a bank account for your adult children each month. The regularity of payments out of income is most important.
Natalie added: "All gifts made more than seven years before the donor dies are free of IHT. However, if you reserve any benefit from a gift such as continuing to live in a house you have given away thenHM Revenue Customs (HMRC)may apply gift with reservation rules to apply tax as if the transfer had never happened.
"You may ask whether anyone would find out about any gifts you give to your children. Perhaps not, but when you die your executors or personal representatives will need to make declarations to both the court and the Inland Revenue Capital Taxes Office.