Martin Lewis issues tip to grandparents who 'gift' their grandkids money

Martin Lewis has provided a crucial tip to grandparents wanting to give their grandchildren an early inheritance gift of £3,000 tax-free. A listener wrote into the Not The Martin Lewis Podcast inquiring about the specifics of the tax law.

The listener questioned: "My grandparents wish to gift me part of my inheritance early. I understand that they can give £3,000 each tax-free. But since this is the first time, can they carry over last year's allowance? ".

Kari Mellon, a chartered tax advisor from Opes Tax and guest on the show, responded by saying: "Yes, £6,000 in the first year and then £3,000 for each year afterwards."

Host Mr Lewis also mentioned: "They may be able to give you more if they have surplus income that they could give away."

Rebecca Benneyworth from Rebecca Benneyworth and Co also chimed in, stating: "Providing you make regular gifts from your surplus income which do not affect your standard of living, those gifts are immediately free from inheritance tax.", reports Birmingham Live.

She further clarified by saying: "But first of all, you have to identify what is your surplus income. If you take in all of your income that you receive in a year, take off all of your expenses including a new car or a holiday and your tax liability. If you have a surplus left over, then that's the maximum that you could give away."

She further commented: "There was a case a few years ago where someone died after only making one or two gifts out of surplus income, but the executors were able to prove that the intention was there to make it a very regular pattern, so they were successful in their claim."

"But if you've made them three or four times a year for a number of years, you've got a really good pattern there."