Please explain IHT rules on gifts

By THIS IS MONEY
Updated:

 

Inheritance tax rules state that you can give £3,000 away every year and also carry over the previous year's amount if you haven't used it.

Gift wrapped present

Gifts: How much can I give as a present before IHT applies?

Does this mean you can give only one person £3,000 every tax year or can you give more than one person £3,000 each? S.P., City of London

Simon Moon from This is Money replies: I put your question to Matthew Cox at Skipton Financial Services who confirmed you can carry over any unused IHT allowances from the previous tax year.

Under these circumstances, you could give one person £6,000 or two people £3,000 each as a 'potentially exempt transfer' without having to worry about any future IHT liability.

>> Visit our inheritance tax section for more advice

Normally, assuming allowances are used up each year, you could not give more than £3,000 to a single individual. However, there are exceptions to this. For example, you can make wedding gifts of up to £5,000 to each of your children.

It should also be remembered that you can make regular gifts of any sums you choose as long as the money comes from income and you can show when the time comes that this has not been a device to run down savings to reduce the eventual IHT bill.

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