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A lot of people will quite understandably assume if they can give their estate away it wont be taxable.
This unfortunately is not the case the inland revenue has spotted this potential loophole a long time ago and pretty much closed it. That is not to say that you cannot give away your estate but in the short term it is still taxable.
There is some rules surrounding gifts that are very important to know and they are as follows:-
Annual exemption - You are allowed to give up to £3,000 tax free per year either as one single gift or a number of gifts adding up to the £3,000. You should bear in mind that this exemption can be carried forward one year if it is unused thus providing potentially £6,000 of exemption.
Small gift exemption - are also allowed to gift up to £250 per annum to as many individuals as you like.
Civil Partnership of wedding gifts - You are able to give a gift up to a certain value to anyone getting married or registering a civil partnership. This however does depend on your relationship with the beneficiary, parents can give £5,000 any other relative can give £2,500 and a non relative can give £1,000. These gifts have to be made on or before the wedding day and if the wedding does not take place then the exemption on the gift is not valid.
Finally you are allowed to make what is known as regular gifts. These gifts have to be made from normal after tax income and they are such things as regular payments to someone or Christmas or Birthday gifts and also regular premiums to life insurance for another person. The key factor here is they have to be regular so not one off or they could be treated as PETs.
For gifts or payments over and above these amounts please see the 7 year rule page.
This section covers the various gifts available to you to utilise the tax free benefits open to you.
Here you will find all the exemptions which may enable you to pass on parts of your estate free of any inheritance tax.
Gift any part of your estate outside those allowable will create a potentially exempt transfer find out how you stand under the tax laws.
There are certain relief's that like the exemptions allow for transfer to people without tax this section covers those.