Gifts

Trust you all have had a wonderful Christmas and Happy New Year.  Christmas celebrates the ultimate Gift - Jesus Christ. Christmas is also a major gift-giving season in many cultures. In the weeks leading up to Christmas, people often engage in extensive shopping for gifts, decorations, and festive items.

Some tax guidance on gifts paid and received in the UK and NZ:

Do I pay income tax on a cash gift?

Those receiving cash gifts may also be wondering if they have to pay tax on it. In the UK,  HMRC doesn’t count cash gifts as income, so you won’t have to pay any income tax on cash gifts received from parents (or grandparents for that matter). However, if you make any income from that gift, even if it’s interest earned in a savings account, you may be liable to pay tax on it. You may have to declare this additional income on a tax return, and could expect to pay income or capital gains tax on the amount.

In New Zealand, gifts are not usually subject to gift duty, but other taxes, such as gift duty or estate duty, may apply in certain situations. It's recommended to seek advice from tax professionals or the IRD for personalized guidance based on your specific situation.`

How much can I gift my child tax-free?

You can gift your children up to £3,000 a year without it being subject to tax. In addition to weddings, cash gifts given at Christmas and birthdays also aren’t taxed, provided you’re not reducing your standard of living by giving the money. Above these limits, you’re still able to gift more, but the timing becomes essential. This is because of the seven-year rule, which states that tax is not due on any of your gifts if you live more than seven years after it’s been given. The rule also only applies if the total value of the gifts made at least seven years before you die exceeds the £325,000 tax-free allowance.