Can I gift assets to avoid Inheritance tax (IHT)?
Gifts are treated in a number of ways for Inheritance Tax purposes. However, you only need to worry about making gifts if you think your estate - including the value of any gifts you make - might exceed the Inheritance Tax threshold when you die. If your estate is over the threshold,any gifts you make more than seven years before you die will be exempt from Inheritance Tax.
If you give something away but keep some form of benefit this may become a gift with reservation and therefore be subject to tax.
You can however, gift from income (subject to meeting the HMRC definition) and everyone can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate.
This is known as your ‘annual exemption’.You can carry any unused annual exemption forward to the next year - but only for one year.Each tax year, you can also give away:wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great grandchild, £5,000 for a child)normal gifts out of your income, for example Christmas or birthday presents - you must still be able to maintain your standard of living after making the giftpayments to help with another person’s living costs, such as an elderly relative or a child under 18gifts to charities and political partiesYou can use more than one of these exemptions on the same person - for example, you could give your grandchild gifts for her birthday and wedding in the same tax year.
You can give as many gifts of up to £250 per person as you want during the tax year as long as you haven’t used another exemption on the same person.