Lifetime Giving Can Offer Security for Your Loved Ones
There are few greater joys in life than giving gifts to the people you care about. Whether it’s a helping hand onto the property ladder or a memorable gift to mark a special occasion, lifetime giving can be incredibly rewarding. But did you know that thoughtful lifetime giving can also help you reduce the amount of Inheritance Tax (IHT) payable on your estate?
To discuss gifting call us on 0113 320 5000
Our Private Client specialists, Monika Volsing and Emily Spencer, are here to guide you through the opportunities of lifetime giving. With careful planning, you can experience the joy of giving now and provide long-term financial benefits for your family.
What is Lifetime Giving?
Lifetime giving simply means giving away assets or money during your lifetime, rather than waiting for them to be passed on through your Will. It allows you to see your loved ones enjoy your gifts while you’re alive. It can also potentially reduce the value of your estate for IHT purposes.
Whether you choose to gift cash to celebrate a wedding, help a grandchild with university costs, or give treasured possessions to family members, lifetime giving is a powerful way to make a difference.
Understanding the Gifting Thresholds
There are specific rules and allowances that make certain gifts free from IHT:
£3,000 Annual Exemption - Each tax year, you can gift up to £3,000 without it being added to the value of your estate. This can be given as a single gift or split among several recipients.
Carry Over Your Allowance - If you haven’t used your annual exemption one year, you can roll it over to the next tax year. Meaning you could give up to £6,000 free from IHT.
Small Gifts Allowance - You can also gift up to £250 to any number of people each year, provided no other exemption is being used for that individual. Birthday gifts and small celebrations are perfect opportunities to make use of this.
Gifts from Regular Income - If you’re gifting from surplus income (such as your salary or pension) and it doesn’t affect your standard of living, those gifts could be exempt too. This could be perfect for helping with school fees, for example.
3 Key Tips for Lifetime Giving
1. Stay Alive for Seven Years
When a gift doesn’t qualify under one of the exemptions, it could still fall outside of your estate for IHT purposes as long as you survive for seven years after making the gift. If you pass away within that period, the gift may still be taxed, though the amount of IHT payable can taper away depending on the size of the gift and the length of time that you live for after making the gift.
2. Keep Detailed Records
Lifetime gifts can add up over the years, and HMRC will want clarity.
Keep a record of:
- Who you gave gifts to.
- The amounts or items gifted.
- The dates of each gift.
Clear documentation can help avoid confusion and smooth the probate process later on.
3. Take Expert Advice
The rules around gifting and IHT can be complex, especially when considering larger gifts, putting gifts into trust, or funding for lifetime events. Speaking to an expert can help you to maximise your exemptions, reduce the size of your estate for IHT purposes, and ensure your planning is legally sound.
Our experienced Private Client Team are here to offer bespoke advice based on your circumstances.
Lifetime Giving - a Gift for the Future
Lifetime giving isn’t just about saving tax. It’s about creating moments, opportunities, and memories with the people you love. It's about seeing the smiles, the gratitude, and the life-changing impact of your support firsthand.
If you want to know more about how to incorporate lifetime giving into your estate planning, or you’d like to review your Will alongside your gifting plans, we’re ready to help.
Contact the Private Client Team at Winston Solicitors today and discover how you can give generously and wisely. Call us on 0113 320 5000 or email wills&probate@winstonsolicitors.co.uk.
We can also help you with Wills, Powers of Attorney, Deputyships and Trusts.
