Financial & Legal News

Christmas Gifts in Wills and Inheritance Tax

  • Posted on

Despite the cost of living crisis, at this time of year and with Christmas around the corner, our Private Client team are getting asked about making ‘gifts’ to children and grandchildren, ‘gifts’ in Wills and the Inheritance Tax repercussions of both.

Gift in a Will

A ‘gift’ does not have to be something wrapped up in a big box with a pretty bow, ‘gifting’ money to a family member, or a ‘gift’ in a Will, is exactly that. Our private client team find that most people want to pass on their hard earned money and their estate to nominated family members, or sometimes friends.

A ‘gift’ can be:

  • money
  • stocks and shares
  • property and land
  • jewellery
  • precious family antiques

It is also worth noting that you can gift up to £250 to as many loved ones as you wish in one tax year, or £3,000 to one person per tax year to make use of the annual gift allowances.

Of course, your estate is only liable for Inheritance Tax if your assets are worth more than £325,000 (this is doubled to £650,000 for married couples as this is an allowance that can be inherited from a deceased spouse provided they leave all of their assets to each other). Further Inheritance Tax allowances can be claimed by your executors in some instances, but you can discuss this with your adviser.

Inheritance Tax Thresholds

Inheritance Tax is charged at a rate of 40% on the value of assets, over £325,000, left by a person on their death. Simply put, anything below £325,000 is Inheritance Tax free; anything over £325,000 may be taxed at 40% depending on the reliefs available to you.

Anybody considering making ‘gifts’ of money to their loved ones during their lifetime should consider receiving legal advice first. This is because some ‘gifts’ of money can reduce their £325,000 allowance if they die within 7 years of making it.

Gifts and Inheritance Tax

It’s a complicated area as wedding cash ‘gifts’ are considered inheritance tax free, £2,500 for grandchildren and £5,000 to a child from each parent per tax year.

Although complex Inheritance Tax and making ‘gifts’ are some of the most avoidable taxes and you can minimise your liability, if not remove it totally, with Trusts playing an important part of this planning process.

“There are mistakes people make and common misconceptions when it comes to gifting in Wills or as part of Inheritance tax planning and so we would always advise clients to get good advice and start planning early, rather than later,” said Wills and Trusts Adviser, Lucy Roughley.

“A great example of this is when gifts are assets not cash as capital gains tax can come into play.  Or, if you ‘gift’ a house, or money to buy a house to a beneficiary but live in it rent free or below market rate, this could be classed as tax evasion as you should be liable for inheritance tax,” advised Lucy.

“Many young people these days cannot afford to get onto the property ladder and so grandparental or parental ‘gifts’ can help them, even with the cost of living crisis upon us we are getting asked about gifting at this time of year.  I would say the best thing to do is to maximise allowances and get good professional advice.”

How can we help

For legal advice on making a Will, Trusts, Tax and Gifts in a Will contact our private client solicitors on 0161 785 3500 or

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

Written by Lucy Roughley


    Free Initial Consultation

    Please fill in the form and we’ll get back to you as soon as we can.

    We’ll only use this information to handle your enquiry and we won’t share it with any third parties.