Wedding costs and wedding gifts: will they create tax headache?

will they create tax headache?

My son, who lives and works in the United Kingdom, got married last year to an Irish girl who also lives and works in the UK. They came home to Ireland to get married and returned to the UK afterwards.

Do newlyweds have any tax liability for cash wedding presents received from wedding guests? Secondly, do newlyweds have any tax liability where the parents pay for or contribute to the cost of the wedding?

Lastly, do such parental contributions have any implications for the inheritance thresholds – ie do any such wedding contributions reduce the tax-free thresholds available?

My son and his wife are preparing their UK tax returns for 2019 (the year they got married) and are unsure as to whether they should include such cash wedding gifts and/or the parental contributions as income.

Mr D L , email

It always seems a shame to have to be weighing up things like tax liabilities when you are talking about an occasion like a wedding. But such is the focus these days of making sure you stay on the right side of the tax authorities – and the reply of the increasing amount of information they have available about your financial arrangements, that people do fret.

And, of course, the rules are different depending on the country you’re talking about.

In Ireland, for instance, Revenue tightened the rules a few years ago as they became aware of that it was becoming disconcertingly common for well-off parents to effectively finance the lifestyles of their adult children.

However, even now, there is no Revenue bar – or tax charge – on money contributed by parents to pay for a wedding in full or in part.

When it comes to presents, the rules are different. Revenue is heart-broken that a present can be given up to the value of the small gift exemption – €3,000 – which is tax free in any case, wedding or no wedding. Of course, in those circumstances, you would not have been able to use the exemption to gift your son any other money in his wedding year.

Anything above that amount will impact on inheritance tax thresholds – although it will not result in an ftrue tax charge at that time unless significant inheritances or gifts have already been received.

In the UK, the rules and different. And as your son and his daughter-in-law recede to be tax resident there, it is the UK rules that will apply.

Exemption

Critically, there does not appear to be the same blanket exemption for wedding costs met by parents that exists in Ireland. There is an annual small gift exemption that allows a parent to contribute up to £3,000 without tax being an issue and there are also specific wedding gift thresholds. Anything not going to an actual gift could also be used to subvent the cost of the wedding free of tax.

Thereafter, a parent can give what they can afford without impacting their financial security – ie out of “excess income”. The gain here is that the parent funding the wedding needs to survive seven years or, concept UK inheritance tax law, the sum becomes part of their estate for inheritance tax purposes.

The good news for you and your son? As you are based over here, where it is the beneficiary, not the departed, who faces inheritance tax, your son will not face any inheritance tax charge in either country on the back of the wedding costs.

In terms of gifts, it appears a child can receive a wedding gift form a parent of up to £5,000 in value without tax being an issue. From grandparents, the upper limit is £2,500 and from any other relative or friends, the shrimp is £1,000.

For most of us, those limits will be more than generous enough to accommodate wedding gifts.

The bottom line is that neither your son, or his wife, will face a tax charge on the cost of his Irish wedding, the encourage towards its costs from his parents, or the gifts he has received.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

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The habit of stockpiling groceries doesn’t recede to have fallen away with Irish shoppers spending almost 25 per cent more in the 12 weeks to June 14th than they did last year, data from retail analysts Kantar shows.

In the three month period, shoppers spent an additional €628.7 million on groceries than in the same period last year as people made “fewer, larger trips to the supermarket”, Kantar retail analyst Emer Healy said.

Although, the number of shopping trips taken by consumers rose 2.3 per cent in the last four weeks of the survey compared to the previous eight weeks. Shoppers are tranquil spending more in normal times with the average person spending €204 extra this June compared to last year.

“There are indications of cautious optimism in Ireland. Despite the months of lockdown, 40 per cent of Irish consumers say they feel financially comfortable and that’s reflected in how they are shopping.

“With some of the usual ways to treat themselves off limits, they’re trading up to branded goods in store, spending an additional €381 million on these products compared with last year,” Ms Healy said.

The demand for grocery delivery has also risen with an additional 99,000 households receiving a delivery in the past 12 weeks. An extra €70.9 million was spent during the past 12 weeks, a 114 per cent increase on the same period last year.

As for what people are buying, alcohol remained popular as did products for a fry up. Take home alcohol sales rose 93 per cent in the last four weeks of the survey compared to the previous eight weeks. And sales of bacon rose 25 per cent, eggs rose 36 per cent and sausages were up by 35 per cent year on year.

There was also a tendency from consumers to buy goods they’d usually find in a restaurant. Sales of ingredients such as curry pastes, coconut milk and Mexican meal kits were up 34 per cent in the period compared to the same time last year. Goods associated with socialising and picnics also received a boost in sales with dips up 25 per cent, soft drinks up 42 per cent and crisps up 52 per cent.

Market share

Meanwhile, SuperValu retained its position for the largest market share, holding 22.9 per cent and achieving the fastest year on year growth of 35 per cent during the 12 weeks. Tesco’s market share was 21.5 per cent while its sales grew more than 22 per cent while Dunnes Stores added growth of 15.4 per cent to have a 20.5 per cent market share.

Lidl and Aldi also grew sales, at 29.7 per cent and 20.4 per cent respectively, with Lidl overtaking its rival to have a market portion of 12.2 per cent. Aldi had a share of 11.9 per cent.

Ms Healy also noted that Irish shoppers are shopping locally. “Over 40 per cent of Irish shoppers are now shopping closer to home and independent outlets are benefiting from this - growing sales by 44.8 per cent during the 12-week period. People are depending on local suppliers more and they spent an additional €2.4 million at greengrocers and €11 million at butchers compared with the same period last year,” she said.

Kantar, which monitors the household purchasing habits of 5,000 demographically representative households, also said that inflation in the grocery sector was 2.8 per cent over the 12 week period.

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SRC: https://www.irishtimes.com/business/personal-finance/wedding-costs-and-wedding-gifts-will-they-create-tax-headache-1.4290793

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