Am I using my tax exempt gifting to grandchildren correctly?

Our financial adviser said it is not something to worry about unless there is a query re assets at death. We have given very large sums out of our pensions to both AC for deposits on homes. One 10 years ago the other 4. And we have given other sums if we can afford it at times of crisis. We feel very lucky that we have always been so cautious with £ (not highly paid but regularly paid salaries) that we have this to give now. I wouldn’t worry.

I suggest you contact an accountant or tax specialist for advice.

I agree with knspol- If you have enough money for inheritance to kick in and matter, go to a solicitor or accountant and ask- they do Zoom meetings. There are grains of truth in everything I have read here but it is all useless advice without knowing how much your assets are, what your income is and what you want to do. So the answer to your question is that it depends
Never ask for financial or medical advice from amateurs. Unless people on here are qualified it is at best well meaning chinese whispers.
Sorry if that is harsh

When the time comes it is your estate that may be taxed. Ok so that leaves a bit less of an inheritance and may be worth planning for. Do your family have greater need for the money now that they are likely to when you die? Nobody knows when that will be.
If it is relevant enough to be of importance, I would suggest seeing a financial advisor to make sure your plans are tax efficient.
I have kept a record of any substantial gifts I have made but I am not expecting it to be needed.

I give money to the family way in excess of £3,000 per year and believe that as long as it is coming out of your disposable income it is fine.
I would never redeem long term investments or pension to give as gifts.

Be careful giving money away can be seen as avoiding care fees, it may come back and bite you, but only if you had a diagnoses before donating the money.

How nice though to be able to be generous.

Dad gave His grandson money to help at uni. Social services counted it when assessing his care costs.

It’s fine to give the 3k,as the money already given at Christmas and birthday is classed as gifts that are not included in any taxes what so ever.

www.gov.uk/inheritance-tax/gifts

Go to the above website it will make it very clear for you

But how do they know? I can't believe HMRC goes through 7 years of bank accounts for every estate going through probate.

My understanding is that you can make regular gifts from your disposable income to whoever you like! I totted up our incomes, outgoing payments and what might be spent on holidays/new car etc; calculated what we had left over each month and use part of it to make a regular payment to DS and DD. If we need that money, they will access it for us.

If there are two taxpayers in the household, you can each make one gift of £3000 to one other person. DH gifts to DD and I gift to DS. Done it for several years now.

pintuck

But how do they know? I can't believe HMRC goes through 7 years of bank accounts for every estate going through probate.

You will have to fill in forms to get probate. Unless you lie they will know about your assets etc.

Yes, HMRC can go back through bank accounts if they think there is something wrong, they know how much a business makes, an employee is paid and capital purchases too.
Remember accounts are all digital these days and the computer flags up anomalies, hey presto you get a tax investigation.
There is very little they don’t know at the push of a button these days

@kircubbin2000 How did that show itself?

Yes I am still quite confused despite all this kind advice.
Aren't birthday and Christmas gifts exempt from all the £3K IHT rule?

Someone asks, how do they know? When applying for probate, the executor(s) of the estate will be asked to check the records and declare any substantial gifts that might exceed the allowance. Many executors won't know, and won't be able to match up every Christmas gift recipient against a lump sum received in the same tax year. If smaller payments have been made by different methods (cash, cheque, bank transfer, gifts of Premium Bonds) it'd be almost impossible, and anyway it's not the sort of fraud that HMRC is after. The executor will just report that all is in order, and that'll be an end of it.

So it's not you, the donor, who has to pay tax and give an account of gifts given; nor is it the recipients who are liable for tax . It's on the estate of a deceased person that any tax is levied, and only if IHT is payable, which now applies in only a small percentage of cases, as the allowances are now very generous, and unused allowances can be passed on between spouses.

Us more humble folk shouldnt have to worry about inheritance tax, it would be fairer if it was only the 'toffs' (more well off) who should be taxed, as they have far more to give away in the first place ?

Here are the exact rules for gifts from HMRC

www.gov.uk/inheritance-tax/gifts

It’s not just “Toffs”, anyone who has a successful small business or a couple who have had long working careers, especially if the havn’t used the allowances available can be caught by inheritance tax.

A couple who are passing on a family home to their children can now leave up to a million pounds (between them) before their estate is liable for tax. So the "humble folk" have nothing to worry about.

grannyticktock

A couple who are passing on a family home to their children can now leave up to a million pounds (between them) before their estate is liable for tax. So the "humble folk" have nothing to worry about.

They can BUT READ THE RULES.
Wills have to be written correctly!.

Just read the gifting info Katie59, Sally was a lucky so and so!

My mum gives her children (myself and my brother and sister) £1,000 per year. On top of that she gives £250 each to her 7 grandchildren. We have been led to believe that this is all above board. It is a birthday and Christmas gift combined