Stratford-upon-Avon
13 The Courtyard
Timothy's Bridge Road
Stratford-Upon-Avon
Warwickshire CV37 9NP
Lifetime gifts can reduce Inheritance Tax, but survival for seven years and using key exemptions like the £3,000 annual allowance are crucial to making them fully tax-free.
Most gifts made during a person’s lifetime are not immediately subject to Inheritance Tax (IHT). These are known as potentially exempt transfers (PETs) and can become completely exempt from IHT if the person making the gift (the donor) survives for more than seven years after making the gift.
If the donor dies within three years of making the gift, it is treated as if the gift was made on the date of death, and the full rate of IHT may apply. However, if death occurs between three and seven years after the gift, taper relief can reduce the amount of tax payable. The further away from death the gift was made, the lower the tax rate applied, although this only reduces the tax due on the amount above the nil rate band.
It’s important to note that taper relief does not reduce the value of the gift itself, only the tax payable, and it does not apply where the gift is within the nil rate band. Additionally, it does not lower the tax on chargeable lifetime transfers to below the amount originally assessed when the gift was made.
Each tax year, individuals can also take advantage of specific IHT exemptions that allow gifts to be made tax-free, regardless of survival for seven years.
The annual exemption allows you to gift up to £3,000 in total each tax year without adding to the value of your estate for IHT purposes. This amount can be given to one person or shared among multiple recipients. If the full £3,000 exemption isn’t used in one tax year, it can be carried forward, but only for one additional tax year.
The small gift allowance allows you to give as many gifts of up to £250 per person per tax year as you like, as long as no other exemption is used for the same individual. This is ideal for birthday or seasonal gifts made from regular income.
Additionally, you can make tax-free gifts in celebration of weddings or civil partnerships. These are exempt up to £5,000 for a child, £2,500 for a grandchild or great-grandchild and £1,000 for anyone else.
Grenfell James Technology Adoption Index
How does your business perform against others adopting financial tech? Find out with our interactive diagnostic:
1.
How does your business receive invoices?
A)
Invoices are mainly received in paper form
B)
Invoices are mainly received by email
C)
Invoices are emailed then automatically forwarded to a designated mailbox
2.
How are purchase invoices processed?
A)
Invoices are entered manually
B)
Invoices are attached to manually raised invoices
C)
Automated software (e.g. ReceiptBank, 1Tap, HubDoc etc) collates invoices
3.
How are accounts processed?
A)
Using Excel/paper-based
B)
Using Computer-based, offline software
C)
Using cloud-based accountancy software
4.
How often is business data revised?
A)
Data is updated annually
B)
Data is updated quarterly
C)
Data is updated monthly or more often
5.
How is banking updated for your business?
A)
Banking is updated manually
B)
Banking is updated by imports
C)
Banking is updated via a live feed
6.
How are bank payments made?
A)
Bank payments are manual
B)
Bank payments are made using bulk imports
C)
Bank payments are made directly via accounting software
7.
How are bank receipts reconciled?
A)
Receipts are chased and reconciled manually
B)
Receipts are chased and reconciled automatically
C)
A third-party platform is used to chase debts and collect fees
8.
How often are management reports produced?
A)
No reports are provided
B)
Reports are provided but often too late to be valuable
C)
Reports are automated with real-time information
Score 8-12:
Curious Exploration
Your financial technology phase is Curious Exploration
% of respondent businesses are in this phase too.
Switching accountancy systems may seem like an upheaval, but can be much more straightforward than most businesses imagine. From talking to our clients, they have found moving from paper invoicing and desktop-based accounting software to the cloud and apps quickly makes the transition process a worthwhile investment of time. Digital accounting solutions bring in streamlined processes, up-to-date business data and greater confidence in the accuracy of information when making financial decisions.
Grenfell James works with your team to fully assess the needs of your business and minimise the impact of any transitions for solutions we recommend.
Score 13-19:
Measured Discovery
Your financial technology phase is Measured Discovery
% of respondent businesses are in this phase too.
Once cloud accountancy software is in place, there’s still plenty of scope to improve your accountancy processes and make sure your business is maximising the benefits of adopting a digital accounting solution. Grenfell James assesses each business to understand how any implemented solutions are being used, identify areas for improvement and the needs of the business overall to support your business goals and achieve success.
Our team of experts can discuss a range of time-saving automation and get different apps and cloud-based solutions talking to create and manage a digital accountancy eco-system to help your business grow.
Score 20-24:
Bold Innovation
Your financial technology phase is Bold Innovation
% of respondent businesses are in this phase too.
You know the benefits of accounting technology and the impact it can have on your business goals. If you want to take it a step further, our team can conduct a systematic review of your processes, apps and business goals to ensure your digital accountancy ecosystem is keeping pace with the changing needs of a growing business.