The events of the last year have of course given rise to well-documented stories of personal tragedy and hardship. However, there has been one unintended consequence of the situation that has started to receive more attention as we progressively move towards a more normal time.
Official figures have shown that gross savings as a proportion of disposable income for 2020 was 16.3%, a record, up from 6.8% in 2019. Whilst the pandemic has clearly impacted adversely on many, for some, not spending on travel and leisure, or eating out or commuting means money has been put aside. Much of this money is in current accounts waiting for a “longer term home”. If you are one of the lucky ones and do not intend to immediately spend this surplus, an alternative option may be to consider “gifting”. For those of slightly more mature years, if you have accumulated surplus money, you can consider making gifts of money up to your £3000 annual allowance. This can be to family or friends who may have experienced greater hardship in the Lockdown. You may decide to be more generous with a gift of more than £3000 and make a PET (potentially exempt transfer). Such gifts are not subject to inheritance tax if the donor survives for 7 years or more following gifting.
We are always happy to advise on these delicate matters and help to ensure that you document your decisions correctly as you seek to be generous with family or friends.