My question is regarding inheritance tax and possible exemptions therefrom. I see a lot of useful stuff on this subject but while ‘gifts’ are mentioned frequently, I’ve never heard the word defined.
For instance, I book a holiday cottage and having done so, would like to have the family along for company. Am I making a gift? My granddaughter likes riding so I buy and keep a horse, but only she rides it? Is that a gift? Similarly, my grandson likes driving and I buy a car. What about school fees?
Any clarification of this area would be a comfort.
Stephanie Court, Private Client Tax Director at RSM UK
For what seems like a simple question, the answer for inheritance tax (IHT) purposes is quite complicated. A gift might ordinarily be defined as a thing given willingly to someone without payment in return. However, there is no express tax charge on ‘gifts’ defined in the IHT legislation; rather, tax may be charged on ‘the value transferred’ by a ‘chargeable transfer’. Let’s break down what that means.