– what you need to know
Parents and grandparents keen to help their offspring get onto the housing ladder are increasingly helping them out with the money
they need for their deposit. This can help reduce Inheritance Tax (IHT) too, but you need to be aware of the rules.
Everyone has a yearly ‘gift’ allowance for IHT and can give away up to £3,000 each year. If you don’t use it, you can carry over any unused allowance from one tax year to the next.
Weddings are another opportunity to hand over cash to loved ones – parents can each give children £5,000 as wedding presents, and £2,500 to grandchildren or great-grandchildren, or £1,000 to anyone else, all free of IHT.
You can make more significant gifts above and beyond those listed above, known as ‘potentially exempt transfers’. You need to live for at least seven years after making the gift for it to be outside the estate for IHT.
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