Whatis A Gift Of Money?

[Segilla]

I have given my children the maximum, £3000 this tax year. Are charitable gifts treated differently?

Maybe these could come under the other gifts not exceeding £50 rule, but what if I wanted to give more than £50? Split it into £50 lots?
TKS

[Peter Pedant]

No charity is separate - and dont forget to put it on you tax form -you are clearly a higher rate payer

and your second para is not clear - the £50 doshes are separate and dont need to be split - but I like the idea of you saying - I've split the £50 and here's your packet of maltesers.... can I have a receipt for IHT purposes...

I will check - if you have given A 3000 then I dont think you can give A another fifty BUT

dont forget to give money 'out of income' any amount and a section largely forgotten

[boxtops]

I am sure that you just gift to a charity, and claim the Gift Aid - I think the rules for these donations are different than if you are giving gifts to family from your disposable income (but I am no expert).

[Peter Pedant]

Here is the tax man's ideas on 'out of income'
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm14255.htm

and clearly you can browse the other bits of the IHT manual
and have hours of innocent fun !

rules are pretty clear actually

[Peter Pedant]

like this !

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/intro-iht-plannning.htm

yes that is catchily titled inheritance tax planning - from the tax man (bless!)
You have got the idea that IHT is a 'volungtary tax' and you can settle things to pay an absolute minimum....

[factor-fiction]

The maximum figures you quote relate to Inheritance Tax rules, so I just wanted to check that your question refers to inheritance tax planning. If your estate is not going to fall into the IHT bracket (which was around £325K for a single person, £650K for a widow/widower a few years ago) then you can gift as much as you like. Even if IHT is an issue you can gift larger amounts if you pay it out of income without affecting your lifestyle.

[Segilla]

Thanks for all your comments.

This has nothing to do with IHT, simply the max allowed to be gifted each year without attracting any retrospective claw back if I (aged 80), don't live for another 7 years (I think it is).

I understand that on top of the £3k, any number of amounts not exceeding £50 can be given away. Hence, *if* I was in a position to give away £2k to my local canal or railway heritage project, that if the £3k limit was already spoken for, the £3k could be given away in a series of £50 amounts.

The main point was - do charitable gifts differ from others.

[factor-fiction]

Segilla- I have no idea what you mean by clawback at age 80. I think you are thinking of the clawback under IHT.

[dzug2]

Charitable gifts (to a properly registered charity) from your estate are exempt from IHT - likewise lifetime gifts are outside the IHT rules.

xx This has nothing to do with IHT, simply the max allowed to be gifted each year without attracting any retrospective claw back if I (aged 80), don't live for another 7 years (I think it is). xx

That has everything to do with IHT

[boxtops]

I think the 7 years you mention relates to Gifts Inter Vivos - in the days I worked in insurance, you could take out a policy which paid out if you died before the 7 years after the gift had passed, to cover any potential claim for IHT.

[Segilla]

So, provided I restrict non registered charitable gifts to £3k pa, I've no need to worry

... except about trying to rely on old memories of such regulations.
For that my advice is immutable. Don't get old!

[factor-fiction]

>So, provided I restrict non registered charitable gifts to £3k pa, I've no need to worry

No. If IHT is not an issue there is no £3k limit. You can give as much as you want

[Segilla]

Unsurprisingly, I'm now totally confused.

My total assets are below the IHT threshold and I live simply on my pension. I want to pass on money I inherited to my children - despite the fact I suspect that they will simply blow it :-(

I understood that if I made them an aggregate gift of more than £3k pa. then the excess would be liable to a clawback of tax if I die within 7? years.

Am I right or not in thinking that if I give them >£3k this tax year, *considering my age* HMRC would be likely to claim some of the money back?

[factor-fiction]

I have no idea what you are talking about, Segilla- sorry.
I don't know how many more ways to say it- if IHT isn't an issue you can give what you like- there is no £3k limit and no clawback.

[dzug2]

..I understood that if I made them an aggregate gift of more than £3k pa. then the excess would be liable to a clawback of tax if I die within 7? years..

You understand completely wrong. The 'clawback of tax' only occurs if your total estate (including the excess gifts) is in excess of the IHT threshold.

[dunnitall]

How I understood this is that you can gift to family up to the limit, used to be £2500 I think, but if you die within seven years they will pay tax on it where if you live past the seven years it is tax free.

[boxtops]

... which s why you used to be able to buy that insurance policy in case you die in the seven-year period - I suspect you still can.

[boxtops]

yes you can, here is one such offer (and there are others) http://www.yourlifeprotected.co.uk/types-of-cover/gift-inter-vivos/

[factor-fiction]

>"How I understood this is that you can gift to family up to the limit, used to be £2500 I think, but if you die within seven years they will pay tax on it where if you live past the seven years it is tax free."

Hi dunnitall- but surely that's only the case when IHT could be a factor. In Segilla's case, IHT is not an issue

[Peter Pedant]

Different way of looking at it FF
but I agree if the estate is less than £325 k then there are no IHT issues and the money can be shifted when and where you want.

and the answer Segilla to your para 1 is Yes - as in gifts and charitable giving are different.

[factor-fiction]

If, as Segilla says, this has nothing to do with IHT planning, then the answer I think, PP, is:
1) There are no limits on gifts to family and charitable gifts.
2) But there is a difference in that for charitable gifts some gift aid can be claimed for the charity if you are a basic rate tax payer and additional gift aid for a higher rate taxpayer, maybe up to a limit, whereas no tax relief/gift aid applies to gifts to family members/friends