It is not uncommon to want to give money to others – either now or after you have passed away. Whether you want to make financial gifts within your family or leave a charitable legacy to a cause that is close to your heart, we can help.

Making financial gifts

When it comes to making financial gifts, we often advise our clients on:

  • Using the many available tax allowances for gifts
  • Setting up trusts for complex gifting, or for making a gift to someone unable to look after it themselves
  • Passing on a pension as part of their estate planning
  • Finding out how much money they can afford to give away without affecting their lifestyle or plans for later life

Keeping control over your gifts

It’s not uncommon to make financial gifts with certain conditions. Many people want their money to be used for a specific purpose, such as a grandchild’s wedding, or only accessed at a certain age. Others are keen to ensure their money stays within their family through the generations. Our experts can help to ensure your money ends up in the right hands and is used for the right reasons by setting up a trust.

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Our guide to financial gifts explains the tax rules and allowances that you need to be aware of when making gifts.


Using gifts and philanthropy to reduce Inheritance Tax

  • We often give people advice on making financial gifts as part of their wider estate planning
  • Most financial gifts leave your estate after seven years, therefore reducing the size of your estate and potentially the Inheritance Tax bill you leave behind
  • If you leave more than 10% of your estate to charity in your Will, the rate of Inheritance Tax charged on your estate will reduce from 40% to 36%
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Philanthropy and leaving a charitable legacy

We help many clients with making charitable donations, either during their lifetimes or in their Wills. One simple way is to use Gift Aid to boost regular donations while cutting your tax bill. Another is to set up a charitable trust for larger or more long-term giving. Whatever you want to achieve with your charitable legacy, we can recommend the most effective way for you to donate.

Investing money for a future gift

If you are setting aside money for a future gift, such as a grandchild’s first house deposit, you may want to invest it. This could see the value of the money grow over time. We can give you advice on how to invest the money, or make all of the investment decisions for you.

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How much money can you afford to give away?

Many people want to help others and know their kindness is making a difference, but this can cause problems if you give away more than you can afford to. We can forecast your future finances and show you how much money you could give away.

To do this we will take into account your regular spending in later life alongside any specific plans, such as a holiday each year. We can also make other considerations such as the cost of long-term care, a stock market fall or the death of a spouse.

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Frequently asked questions

1. What is the annual allowance for tax-free gifts?

Every year you have a £3,000 allowance for tax-free gifts. Gifts over this amount could be liable to Inheritance Tax. Once the current year’s allowance has been used, any unused allowance can also be carried forward from the previous year, giving you an allowance of up to £6,000.

However, there are many other rules and allowances to take advantage of. For example, you can make unlimited individual gifts of up to £250 per person each tax year and gifts of up to £5,000 towards a child’s wedding. You can also make unlimited regular gifts out of excess income.

2. What is a potentially exempt transfer?

If you die within seven years of making a gift it will form part of your estate and could be subject to Inheritance Tax. During this seven-year period, the gift is known as a potentially exempt transfer. After seven years have passed, the gift leaves your estate – at this point it becomes an exempt transfer and is no longer liable to Inheritance Tax.

If you make gifts in excess of the nil rate band, the Inheritance Tax liability will reduce to 0% incrementally over the seven years. This is known as the seven year rule

3. Can I leave a gift for a specific purpose or with certain conditions?

It is possible to leave gifts with certain conditions or requirements. This is usually achieved by setting up a trust. This means you could specify when the money is used and for what purpose – for example, on a grandchild’s 18th birthday or to pay for education fees.

4. How can gifts reduce an Inheritance Tax bill?

Making financial gifts can reduce the amount of Inheritance Tax your beneficiaries will need to pay by reducing the size of your estate. A smaller estate means there will be less tax to pay (or potentially none at all).

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Speak to us to find out how we can help you: