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Tis the season of goodwill…

Many of you will have now finished your Christmas shopping and will be looking forward to the Christmas break.

Tax planning, and making gifts on behalf of family members for whom you hold a power of attorney, will understandably not be at the forefront of most people’s minds at this time of year, but we thought a rundown of the relevant points might be helpful.

Gifts under a power of attorney

You may be an attorney under an Enduring Power of Attorney (EPA) or Lasting Power of Attorney (LPA) for a relative or friend who no longer has mental capacity and who cannot decide to make their own Christmas gifts. If you are an attorney under an EPA the legislation states that you as attorney can make gifts from the incapable person’s funds on “seasonal” occasions to people to whom the donor of the EPA is related or connected. Attorneys under LPAs are authorised to make these gifts on “customary occasions” which includes any occasion when presents were customarily given within families. If Grandma was in the habit of putting some cash into the grandchildren’s Christmas cards, you as attorney can carry on this tradition, but bear in mind that the amount of such gifts should not exceed what is normally given on these occasions as the Court of Protection’s authority is necessary for larger gifts.

Inheritance tax and Christmas gifts

Although there’s no specific exemption for Christmas gifts, the vast majority of presents will have no inheritance tax consequences as outright small gifts of up to £250 per recipient are exempt (this is a cumulative limit for all gifts to the same person in any one tax year). If you make gifts to charity at this time of year these are exempt from inheritance tax (as they are at any other time of the year).

If you decide to be particularly generous to your children, your inheritance tax annual exemption of £3000 will ensure that there’s no tax to pay, and you could bring forward last year’s exemption too if this hasn’t been used. There need be no limits to your generosity towards your spouse or civil partner as unlimited gifts can be made to them which will all be covered by the spouse exemption.

Whatever your present buying plans, we wish you all a very merry Christmas, and a happy and prosperous new year, from all in the Clarke Willmott Private Capital team.

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Your key contacts

Carol Cummins

Consultant

Bristol
Carol enjoys long term relationships with her clients and likes to get to know the families well so that she can help them at each key step in life with a focus on protecting the family wealth from erosion by tax and outside claims so it remains in the family for future generations.
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