There is a £3000 annual allowance for gifts – a very small amount! However, another exemption which might be useful in helping to reduce potential IHT liabilities is for regular gifts from surplus income. If gifts do not qualify for this exemption, the donor needs to survive 7 years from the date of the gifts for them to fall out of charge.
It is important to establish that the gifts are regular – so payment by standing order for instance is preferable and easier to justify than cash payments. It is also necessary for the donor to provide evidence that the gifts are from surplus income taking one year with another, and not gifts from accumulated capital. A record of annual income and expenses is therefore likely to be required to justify the gifts.
Contact us if you require further information or would like an income and expenses template to maintain your income and expenses records.
