Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Timing of gifts given vs Inheritance Tax rates
IHT comes into play on some gifts given up to seven years before your death. Timing of a gift can have a big impact on Inheritance Tax that is paid.
Give gifts in the most tax efficient way – through exempted gifts
Some small gifts that you give out for Christmas or birthdays can be classed as “exempted gifts”, this means they are not usually subject to IHT as long as they were made out of your normal income.
In each tax year, you can:
- give £3,000 worth of gifts without them being listed as part of your estate (annual exemption)
- give wedding gifts worth up to:
- £1,000 per person
- £2,500 for your grandchild or great-grandchild
- £5,000 for your own child
- make payments to help with a person’s living costs
- give gifts to charities and political parties
- give up to £250 in gifts, per person, to as many people you want to (as long as you haven’t already used one of the other exemption methods on that same person).
Calculate how much your Inheritance Tax costs will be
It’s a good idea to work out how much Inheritance Tax your estate could be subject to if you passed away. This means you can plan ahead of time which methods you can take advantage of, to maximise your investments for your loved ones when you’re gone.
If you use an online calculator to work out your Inheritance Tax, we recommend that you also speak to your financial adviser who can help you with your tax planning.