‘What would be the first thing you would do if you win the lottery?’ This is a common question that people discuss when fantasising about a lottery win. However, very few people are aware of the possible tax issues involved.
As Mark King from the Guardian discusses, a lottery win will form part of your estate when you die & will be included when Inheritance Tax is calculated. Everyone has an allowance and if your estate is within this, there will be no Inheritance Tax to be paid.
However, if your estate is above this allowance, Inheritance Tax may be due. Any gifts you have made within seven years of your death are also taken into account.
There are exemptions & reliefs available in some situations. ‘Tapering Relief’ is mentioned by Martin King. This is a complicated ‘totting up’ process. The relief available depends on the value and the length of time which has passed since making the gift.
So what would you do with a big pot of lottery money? Many say they would give some of it away to family members and close friends. Do you believe them?!
There is a lot to think about before you give money away. Seek specialist advice before making gifts of money, whether you’re a lucky lottery winner or not. This could mean you avoid a tax problem for yourself and those you care about.
Contact us about our Inheritance & Welfare Team who can advise you today
Please call 0800 916 9055, or email firstname.lastname@example.org. Our Inheritance & Welfare specialists operate across the country and can offer immediate and accessible representation anywhere in the UK.