The Institute of Chartered Accountants in England and Wales (ICAEW) has issued a timely reminder to anyone attending a wedding (or civil ceremony) this summer and planning to give a cash gift. The gift will be exempt from Inheritance Tax (IHT) once the gift is made on or shortly before the date of the wedding or civil partnership ceremony.
The amount of tax relief varies depending on the relationship between the donor and the recipient.
It is also useful to remind readers that they can also give £3,000 worth of gifts each tax year, known as an annual exemption. Any unused part of the annual exemption can be carried forward to the next tax year. There are also exemptions for normal gifts out of income such as making birthday gifts. The rules allow, for example, a grandparent to give a grandchild a birthday and wedding gift in the same year.
You can also give as many gifts of up to £250 per person as you want during the tax year but only if you haven’t used another exemption on the same person.
Married couples should also note that there is no IHT to pay on lifetime gifts between spouses or civil partners as long as they live permanently in the UK.