Often the rules surrounding gifting can seem daunting, and really tricky to understand. The good news is that HMRC allows you to make generous gifts without needing to worry about the tax man making an entrance down your chimney.
Around Christmas, you may wish to consider using the £250 small gift exemption. This allows you to gift up to £250 per person, per tax year, to as many people as you like, without incurring any tax liability.
You may wish to consider making quite a generous gift to all your family members, depending of course on whether they have been naughty or nice. However, be mindful that you cannot combine the small gift exemption with any other tax exemption or allowance for the same recipient. You don’t want to end up on Santa’s naughty list!
You may also wish to consider the £3,000 annual exemption. This allows you to gift up to £3,000 each tax year without it affecting your inheritance tax position. The £3,000 allowance could be used all in one go to reward one of Santa’s elves or you may wish to split it between each of his reindeers. If you didn’t use all of your allowance last year the remaining balance can be carried forward to the current year’s allowance, but you must use this year’s allowance first.
Christmas is a time of spreading joy and kindness and you may wish to consider these gifting options. Just remember that Santa is always watching to check who has been naughty or nice and you don’t want to end up on the naughty list for gifting twice!
