Tax is complicated and expensive, so Moneycube loves simple ways to save on it.  Here’s one of our favourites – the small gift exemption.

This tax break lets anyone give another person up to €3,000 per year without triggering a tax charge for the giver or the receiver.  We find it a great way to kickstart a long-term savings pot – for example, a house deposit fund, or a child trust fund.  And topped up each year, the funds can become substantial pretty quickly.

Who’s it good for?

Anyone can take advantage of this exemption.

Many people use it as a way to drip-feed inheritance.  In this scenario, a €3,000 chunk could be given to numerous beneficiaries, availing of the exemption each time. Since Ireland has one of the toughest inheritance tax regimes in the world, that’s worth having.

It’s also good news from the perspective of the person receiving the money.  You can receive as many chunks of €3,000 as people are willing to give you.  For example, getting the maximum from four grandparents and two parents would see you collecting €18,000 per year.

How much are you saving?

Normally gifts attract capital acquisitions tax of 33% (although there are some exemptions), so you are saving decent money.  Plus, there’s no paperwork, and you can do it year after year, building up into substantial sums.

 

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