A woman gifted several items during the 2023/24 tax year. These are the following:
1. On 8 September 2023, she gave £4,800 to her son on his wedding day.
2. On 11 January 2023, she gave £300 to her daughter.
3. On 12 February 2024, she gave a classic McLaren car, worth £1,000,000, to a discretionary trust.
4. On 31 March 2024, she gave unquoted company shares worth £60,000 to her husband, John.
The woman had already made a gift that used up her annual exemption available.
Which of the gifts made by the woman during her lifetime are exempt from inheritance tax?
A woman gifted several items during the 2023/24 tax year. These are the following:
1. On 8 September 2023, she gave £4,800 to her son on his wedding day.
2. On 11 January 2023, she gave £300 to her daughter.
3. On 12 February 2024, she gave a classic McLaren car, worth £1,000,000, to a discretionary trust.
4. On 31 March 2024, she gave unquoted company shares worth £60,000 to her husband, John.
The woman had already made a gift that used up her annual exemption available.
Which of the gifts made by the woman during her lifetime are exempt from inheritance tax?
The wedding gift to the son and the gift of shares to her husband.
(C) A parent can gift up to £5,000 to their child on the occasion of their marriage, and this transfer will be exempt from inheritance tax. Therefore, the gift of £4,800 given to the woman's son is also exempt. Gifts to spouses are completely exempt unless the recipient spouse is not domiciled in the UK, in which case the first £325,000 is exempt.
Option (A) is incorrect since the gift of McLaren to the trust is a chargeable lifetime transfer and is not exempt from inheritance tax, as cars are not considered as an exempt asset.
Option (B) is also incorrect because the gift to the woman's daughter is not exempt, and there is a small gift exemption that applies to gifts of £250 or less. However, since the gift in this case was £300, it was not exempt.
Option (D) is incorrect for the same reason as option (B).
Option (E) is incorrect because the wedding gift is also exempt from inheritance tax.