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Why DG Financial Services Ltd?

Gifting

Do you have a financial strategy in place to protect your family’s future while confidently managing a potential Inheritance Tax liability?

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Supporting your family

At DG Financial Services Ltd, we advise clients in navigating the complexities of financial gifting.

With a clear understanding of the regulations, you can give gifts confidently, support your family, and effectively manage your estate’s potential Inheritance Tax (IHT) liability.

What might bring you here?

People often seek advice about gifting when they reach a certain point in their lives or when a specific need arises.

You may be considering financial gifting if:

You want to help your children now
You would rather see your children or grandchildren enjoy the benefits of their inheritance while you are still around, perhaps to help with a house deposit or wedding costs.
You have calculated the value of your estate and realised it will likely exceed the tax-free thresholds, and you want to explore ways to reduce its value legally.
Your income comfortably covers your lifestyle, and you want to use the excess to make regular financial gifts to your family without impacting your own financial security.
You plan to move to a smaller home and want to gift some of the released equity to family members, but are unsure of the tax implications.
You have a basic understanding of IHT rules but need professional clarity on how gifting works and what exemptions are available to you.
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How gifting works in the UK

Key gifting allowances

The UK tax system permits various types of gifts that can be entirely free from Inheritance Tax. These gifts are referred to as ‘exempt transfers’. By cleverly using these exemptions, you can decrease the value of your estate over time, which can help lower your potential IHT bill.
Here are the main tax-free gifting allowances you can use each tax year (from 6th April to 5th April):
Annual exemption
You can give away a total of £3,000 each tax year. This can be given to one person or split between several people. If you do not use your full £3,000 allowance in one tax year, you can carry the unused portion forward to the next tax year, but for one year only. This means you could potentially gift up to £6,000 in a single year if you didn’t use the previous year’s allowance.
You can give as many gifts of up to £250 per person as you wish during a tax year, provided you have not used another exemption on the same person. This is ideal for birthdays or Christmas presents.

You can give a one-off tax-free gift to someone who is getting married or entering a registered civil partnership.

The amount you can give depends on your relationship to the person:

  • £5,000 from a parent
  • £2,500 from a grandparent or great-grandparent
  • £1,000 from anyone else
If you have surplus income, you can make regular gifts from it. To qualify, you must be able to prove that the gifts are part of your normal expenditure, made from your post-tax income, and do not affect your ability to maintain your usual standard of living. This can be a powerful tool for IHT planning, but it is crucial to keep detailed records.
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Understanding the
seven-year rule

What happens if you want to make a gift that exceeds your available allowances? These gifts are known as ‘Potentially Exempt Transfers’ (PETs).

A PET becomes fully exempt from Inheritance Tax if you live for seven years after making the gift. This is often referred to as the ‘seven-year rule’.

If you pass away within seven years of making the gift, its value may be added back to your estate for IHT calculation purposes. However, if death occurs between three and seven years after the gift was made, the amount of tax due on the gift is reduced on a sliding scale. This is known as ‘taper relief’.

Careful timing and record-keeping are essential when making larger gifts.

Gifting with confidence

While gifting is a cornerstone of effective estate planning, it’s vital to get it right. Making gifts without considering all the implications can sometimes lead to unintended consequences. You should never give away assets that you might need for your own future, particularly for long-term care needs.
Your DG Financial Services Ltd independent adviser can help you:
  • Assess your financial position to determine what you can afford to give away.
  • Keep clear records of any gifts made, which is crucial for your estate's executor.
  • Utilise other estate planning tools, such as trusts and life insurance, alongside a gifting strategy.
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How our service supports you

Gifting to support your family and manage your estate requires careful thought and planning. The rules are designed to be fair, and with expert guidance, you can make the most of the available allowances. The team at DG Financial Services Ltd is here to provide the clear, personalised independent advice you need.

We can help you develop a gifting strategy that aligns with your financial goals and offers you peace of mind. We don’t believe in one-size-fits-all solutions or generic advice that overlooks your personal circumstances and dreams.

What to expect when you work with us

Let us guide you toward confidence and lasting security for your estate plans:

Initial consultation

We’ll start with a confidential, no-obligation meeting to listen to your situation, understand your concerns, and identify your immediate priorities.

Financial review

Our team will conduct a thorough review of your shared and individual finances to create a complete picture of your assets, liabilities, and future needs.

Strategic plan

We will develop a clear, personalised financial plan with actionable steps, helping you move towards financial independence.

Ongoing support

As you implement your plan, we remain available to answer your questions, adjust to any changes, and provide continuous guidance.