“Death Duties” were abolished in respect of deaths occurring after 17th December 1992. However, pursuant to the Estate and Gift Duties Act 1968, Inland Revenue still assess for Gift Duty.
A “gift” is defined as a “disposition of property without fully adequate consideration in money or moneys worth”. In other words, a gift is where A receives something of value from B and is not expected to pay for it.
A Gift Statement must be filed with Inland Revenue if gifts of one person within a 12 month period exceed $12,000. Gift Duty is calculated on the following scale:
|The Value||The Duty|
|Up to $27000
$27001 - $36000
$36001 - $54000
$54001 - $72000
5% on excess over $27000
$450 plus 10% of excess over $36000
2250 plus 20% of excess over $54000
$5850 plus 25% of excess over $72000
As an example, a gift of $100,000 would incur duty of $12,850.
Penalties accrue for late filing of gift statements and/or late payment of duty. As will be noted, even where the gift will incur no duty a gift statement must be filed if the gift/s exceeds $12,000.
There are some limited exemptions, the most significant being gifts not exceeding $2,000 in any calendar year from A to B where it “is made in good faith as part of the normal expenditure of” A.
If in doubt about your circumstances, consult us before making a “gift” to avoid paying unnecessary duty.