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الجمعة، 26 يوليو 2019

In which tax year will £6,000 gift count?

In which tax year will £6,000 gift count?

My parents each gave me £3,000 just before the end of the 2018/2019 tax year. They each gave me a cheque and I deposited them into my bank account around 2 April, which was still within the 2018/2019 tax year. 

However, the cheques didn’t clear until after 6 April which was into the new tax year.

My parents are thinking about giving me another £3,000 each in this 2019/2020 tax year.

My question is whether or not the £6,000 I have already received is classed as having been gifted in the 2018/2019 tax year or the 2019/2020 tax year? 

Patrick Connolly Fri, 07/26/2019 - 12:03
From
JT/Warrington

You are referring to the annual exemption. This exemption allows people to give away assets or cash up to a total of £3,000 in a tax year and this amount is then no longer considered to be part of their estate for inheritance tax purposes.

However, a gift given by cheque isn’t effective until the cheque has cleared. This makes the timing beyond the control of the donor if there is a delay in the recipient presenting it to the bank.

The reason for this position is that until such time as payment is cleared, the transaction can still be cancelled.

As a result, the gift that you received will be deemed to have been made in the 2019/20 tax year.

The good news is that your parents can carry forward any unused part of their annual exemption by one year.

So, assuming they didn’t make any other gifts in the 2018/19 tax year, they will be able to each give you £3,000 now.



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