ICAEW highlights tax benefits of wedding gifts
With Royal Wedding fever sweeping the nation, many individuals and businesses will be thinking about wedding gifts for the forthcoming wedding ‘season'.
ICAEW is reminding guests of the tax benefits when you make a gift to the happy couple.
For example, with 1,900 guests expected at Westminster Abbey, William and Kate could get over £1.8 million if they received cash gifts based on the maximum amount which is Inheritance Tax (IHT) free. This takes into account both the parents' and grandparents' IHT maximum amount, including Camilla Parker-Bowles who is eligible as a step-parent. The IHT rules only apply though to guests who are domiciled in the UK.
Anita Monteith, technical manager from ICAEW Tax Faculty, said: "More and more people, such as the royal couple, are living together first so the number of traditional wedding lists with a toaster and a cutlery set are diminishing. A sign of the times is more people asking for money as their wedding present. This is a welcome gift for both parties as it can be exempt from IHT."
Monetary values vary depending on the guest's relationship with the bride and groom and apply to civil partnerships as well:
Each parent of the happy couple can give up to £5,000, making £20,000 IHT free if each has a mother and father (including step-parents)
Grandparents can each give them £2,500
Other relatives or friends can each give up to £1,000 without IHT
In addition, if the bride and groom wish to give a gift to each other on their wedding day, this is also completely free from capital gains tax (CGT). For those couples who both own properties, the CGT rules do become more complicated. The exemption for CGT only applies to one property per married couple. So if the married couple each owns a property, the second may eventually be taxable if it is sold for a profit. The taxman does allow them time to sort out such ‘overlaps'. Of course, an unmarried couple using two houses as ‘homes' can have one house each, so are much better off.
Businesses may also want to take advantage of the opportunity the Royal Wedding brings to make commemorative gifts to customers. Anita Monteith explains: "If a business wants to send a promotional gift to clients, such as bunting or a commemorative mug, they can get tax relief on the presents. As long as it is not food, alcohol or tobacco, each item costs less than £50 and has an advert for the business on it, the cost of the gift is tax deductible."
For further information, visit icaew.com.