Rosemary writes: “We would like to help our son’s family with a deposit for a house. I’ve read that £3,000 is exempt. Can I give £3,000 to my son and the same amount to my daughter-in-law?”
You are referring to the annual exemption from Inheritance Tax on up to £3,000 of gifts. You can give up to £3,000 total during each tax year and it will be ignored for Inheritance Tax when you die. So that gift to your son would use up one year’s allowance. However, if you gave nothing last year you can bring forward that year’s allowance too, so you could give £6,000. The allowance is personal, so if your husband gave nothing last year, then he could give the same — a total of £12,000. In addition, you can give up to £250 each to any number of individuals and they will not count, but not to anyone who benefited from the £3,000.
Remember two things: if you live at least seven years, then any gifts made before that are left out of Inheritance Tax. The first £325,000 you leave is free of tax, and add up to £175,000 for the value of a family home you leave to a direct descendant — a total of £500,000. Only above that will IT be due.
QUESTIONS? Send any questions to Paul.Lewis@radiotimes.com. Paul cannot answer your questions personally but with endeavour to answer through his column in Radio Times magazine.