There are several different options to consider in attempting to reduce to amount of inheritance tax due, which all have their own advantages and disadvantages. It is important to remember that no one option is exclusive and it is possible to combine all of these to give a mix of the different solutions that best suits you.
We can provide information and guidance to ensure you avoid the many pitfalls contained within the rules, and help reduce the impact of inheritance tax on your estate.
Whilst the very wealthy often make lifetime gifts of significant value, the great majority of us tend to retain our wealth until death, often because it is our home or investments on which we rely for our income. With today's house values, the proportion of estates that have an IHT liability increases each year, although with careful will and financial planning, much of this tax liability could be eliminated.
Whilst we welcome the announcement that any "unused" Nil Rate Allowance can later be added to the figure for a surviving spouse or civil partner there are many people that still have an "IHT Problem" because of the value of their assets - or because the qualifications for the full double allowance are not met.
The main 'exemptions' to note in planning for IHT include:
Up to inheritance tax threshold per person is charged at a NIL rate Lifetime and death transfers between spouses are exempt Regular lifetime gifts from income (that do not reduce ones standard of living) are exempt Gifts can be made to children or grandchildren in consideration of their marriage £3,000 per annum annual allowance, per person Unlimited gifts to UK registered charities Lifetime gifts made 7 or more years prior to death become exempt, known as 'potentially exempt transfers' or 'PETS' Reduced rates of IHT will be charged on lifetime gifts over the IHT threshold made within 7 years before death 'Small gifts up to £250 per annum to any person are exempt
Hopefully, the notes above will have alerted you to the impact that inheritance tax can have on family wealth. We will be delighted to help you plan for this eventuality, taking into account not only the need to mitigate the tax, but also the current and future financial requirements of the family members.