An increasing amount of older people are giving away early inheritance gifts to younger relatives, according to research.
Financial services provider Retirement Advantage polled 1,005 over-50s and found 39% have passed on ‘living inheritance gifts’ to their children or grandchildren in the last six 6 months.
The top 5 reasons for passing on gifts early were:
- birthdays (25%)
- university (23%)
- general loans (22%)
- paying off debts (19%)
- house deposit (18%).
Small gifts, such as Christmas or birthday presents, worth less than £3,000 can be passed on to relatives tax-free each year.
This is known as the annual exemption, which can be carried over to the following tax year – but for 1 year only.
You can also gift £1,000 towards weddings or civil ceremonies, £2,500 to grandchildren or great-grandchildren and £5,000 to a child in the same tax year.
Andrew Tuffy, pensions technical director at Retirement Advantage, said:
“Living inheritances are clearly helping out cash-strapped children and grandchildren who may be struggling with the day-to-day cost of living.
“There are some simple rules to remember when gifting which should ensure you don’t fall foul of the taxman.”