Don't lose your gifting allowance for Inheritance Tax (IHT) purposes.

As we approach the end of the tax year 2023/24 in the UK, it's crucial for individuals to maximise their gifting allowances for effective Inheritance Tax (IHT) planning. Understanding the intricacies of gifting allowances can lead to substantial tax savings and ensure a smoother transfer of wealth to your loved ones. In this article, we'll delve into the essentials of gifting allowances in the UK and how you can leverage them efficiently.

Understanding gifting allowance 

The gifting allowance, also known as the gift allowance, refers to the amount of money an individual can gift each tax year without incurring Inheritance Tax. It's a valuable tool for estate planning and reducing potential tax liabilities. For the tax year 2023/24, the annual gifting limit stands at £3,000 per individual. This means you can gift up to £3,000 each tax year without it being subject to Inheritance Tax.

Maximising your gift allowance

To make the most of your gifting allowance, consider the following strategies:

• Regular annual gifts: Utilise the full £3,000 annual allowance by making regular gifts to your loved ones. This could be in the form of cash, investments, or valuable assets.
• Spousal exemption: Married couples and civil partners can effectively double their gifting allowance by utilising each partner's allowance. Consider making joint gifts to maximize tax efficiency.
• Small gifts exemption: In addition to the annual £3,000 allowance, you can make small gifts of up to £250 to as many individuals as you like. This exemption allows for flexibility in spreading your gifts among family and friends.
• Gifts on special occasions: Certain life events, such as weddings or birthdays, provide opportunities for tax-efficient gifting. You can gift up to £1,000 per person (£2,500 for a grandchild or great-grandchild's wedding) without it being subject to Inheritance Tax.

Don’t delay, act now!

With the tax year end approaching, now is the time to take action and make use of your gifting allowances. Failure to utilise these allowances could result in unnecessary tax burdens on your estate. By planning ahead and making informed decisions, you can safeguard your wealth and provide for future generations. I

In summary, maximising your gifting allowance is a proactive step towards efficient Inheritance Tax planning. By understanding the rules and utilising various exemptions, you can minimise tax liabilities and ensure a smooth transfer of wealth to your beneficiaries.

Don't let your gifting allowance go to waste – seize the opportunity to safeguard your assets and provide for your loved ones. However gifting allowances are only one measure to mitigate IHT and they should not be considered in isolation and advice should always be sought from your financial adviser.

Speak to a Dentons Wealth Adviser

For personalised advice tailored to your financial situation, speak to a Dentons Wealth Adviser today. Our team of experts can provide comprehensive guidance on gifting allowances, tax planning, and estate management. Don't miss out on valuable opportunities to optimise your wealth and secure a brighter future for your loved ones. Contact us now to learn more about how we can support you in achieving your financial goals.

Contact Dentons Wealth today for expert advice and support tailored to your individual needs.