Wedding gifts: How much can I give to someone getting married?

The sun has finally broken from behind the clouds and there’s a faint smell of summer in the air.

As we move into May we’re starting to hit peak wedding season here in the UK.

Those of us lucky enough to be attending a wedding this summer will have all sorts to think about before the big day, like what we’re going to wear and what to choose from the wedding gift list.

If you’d prefer to give a monetary gift rather than a swanky toaster or ornamental loo roll holder, you might want to know the rules around gifting.

As one of life’s only certainties, there are tax implications to gifting a large sum of money.

Even the parents of the happy couple need to consider how much they’re handing over if they’re helping pay for the venue, refreshments, outfits and flowers for example.

Significant financial gifts

Making significant financial gifts have significant consequences in certain circumstances.

The older you are, the more there is to consider.

Gifting a large sum to anyone could result in an Inheritance Tax liability for the recipient if you die within seven years of making the gift.

It sometimes feels like the system is designed to prevent people from sharing their wealth.

It’s useful, therefore, to understand what you can do:

• You can make gifts of any amount between a spouse and / or civil partner
• You can give away a total of £3,000 in each tax year no problem (to one person or split between several)
• You can give away £250 to as many people as you like, provided you have not made any previous gifts to the same individual in the same tax year (such as a share of the £3k mentioned above)
• You can make gifts from surplus income, leaving enough money for you to maintain your standard of living (understanding what exactly this means for you needs in-depth financial advice)
• Payments can be made to assist another person’s living costs, such as an elderly relative or a minor
• You can make gifts to charities
• You can gift a large sum as a Potentially Exempt Transfer (PET) which simply requires you to survive seven years from the date of the gift. (More on this below.)

Deliberate Deprivation of Assets

One of the biggest barriers to gifting is the potential accusation of deliberate deprivation of assets.

This is more likely to be relevant to older people, but should be considered by anyone with a life changing diagnosis at any age.

If you need to go into care or receive care support soon after making the gift, you could be accused of giving away your money to appear less well off.

This only really comes into play if you apply for local authority funding because you don’t have the money to pay for the care yourself.

The local authority could refuse your application on the basis you’ve deliberately made yourself less well off in order to qualify for funding; Deliberate Deprivation of Assets.

How this could impact you and your family needs to be discussed with a financial advisor and solicitor.

Inheritance Tax liability

You can give away all of your money anytime you like, and it’s not likely to cause you any inconvenience.

If you die within seven years of the transfer, however, the recipient could find themselves liable for a large Inheritance Tax bill from HMRC.

It’s not likely a modest wedding gift will trigger an enormous tax liability, but it should be a consideration for anyone planning to cover the whole cost of a wedding, or handover a house-deposit-sized cheque to the lucky couple.

If this is you, please speak to a solicitor or financial advisor to understand your individual position and how to avoid landing your loved ones with a headache.

The good news

Happily, there is some good news when it comes to wedding gifts.

You can give fairly large sums to couples who are getting married or entering a civil partnership without any tax considerations at all, hurrah !

Here’s the numbers:

You can handover a substantial £5,000 to your child

And up to £2,500 to your grandchild or great-grandchild

And if you’re a super generous aunt, uncle or friend, you’ll have no problem in gifting up to £1,000 to any other person

The specifics around financial gifts, wedding gifting, inheritance tax etc are all extremely personal to you and your own circumstances.

To know where you stand, seek advice from the professionals and consider the fee a well-spent investment in your loved one’s financial future.

You can contact Patricia Prescott, Senior Private Client Solicitor in Vincents’ Lytham office, anytime to chat things through.

Call 01772 348922 or email PatriciaPrescott@vslaw.co.uk

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