The gift of financial giving: are cash presents a good idea?
It’s the season of giving and for many people, the ideal time to gift their loved-ones with presents of the financial variety. After all, what better time to make someone’s Christmas than bestowing some meaningful money for them to enjoy? However, if you are planning to deliver a festive boon then take into account that there are some rules you need to abide by. The trick is to make those guidelines work for you and your beneficiaries.
Good things, small sums
If you’ve got a few people to gift money to, keep it capped at £250. You can give that sum to as many recipients as you want without the taxman demanding an explanation. Not only will you be operating within the boundaries of the revenues guidelines, but you can also rest easy that those loved ones won’t need to worry about the tax implications. It’s a win-win for everyone.
A grand gift
Every year the taxman allows you to give a one off sum of £3,000 to one person without any inheritance tax implications. It’s important to note that this person cannot have received the aforementioned £250 present from you already. The £3,000 annual exemption can be carried over if you don’t use it all that year, but only for 12 months. For those people looking to gift money to their children or loved ones long before they will inherit, this can be a very useful way to do things. However, if you give one-off sums over and above your annual exemption, be warned that if you then die within seven years of the gift being given, you may be called to pay inheritance tax on the amount.
The wedding present
The special occasion of a wedding in the family has its own financial gift parameters. For example, if your child is getting wed, you are entitled to give them £5,000 that will be free from inheritance tax. Grandparents are also given a provision for a wedding present of the monetary kind as they’re allowed to give £2,500 to a grandchild in the year of their marriage. If you happen to have a congregation of well-off and generous guests, then it could be a wonderful wedding for you as all of us can give £1,000 to someone in the first year of their marriage.
Finally, if you plan to surprise your husband or wife with some money to splurge then feel free to do so. Passing funds between married couples doesn’t carry any tax implications and can be done freely. Here’s hoping that the cheer your generosity brings remains long after Christmas is over.
Have a wonderful Christmas from all at Moyes and if you would like to have a chat about your finances in the New Year, then please do get in touch: T 01638 429975 or email [email protected]