Giving your money away throughout your life can be the simplest and most effective approach to reduce your beneficiaries’ inheritance tax (IHT) liability.
Before we get into gifts, it’s worth reviewing the rules surrounding IHT.
Tax rules are subject to change, and any benefits are controlled by personal circumstances.
Who is obligated to pay?
IHT is typically charged at 40% of the value of your estate (your property, money, and possessions) that exceeds the £325,000 allowance. There is also an additional allowance of up to £175,000 if your family home is passed down to your children or grandchildren. You just include the value of your share of any joint assets.
Inheritance tax can be tricky; we can advise you on how to use tax allowances, but if you want extensive tax advice, and are unsure what to do, we recommend that you visit an accountant or tax specialist.
What are your alternatives for gifting allowances?
- There are a variety of gifts that are instantly exempt from IHT.
- Every tax year, you can give up to £3,000 without it being included in your estate. A couple’s exemptions could be combined.
- Gifts for a wedding or civil ceremony are likewise deductible up to £1,000 per person, £5,000 for a child, and £2,500 for a grandchild or great-grandchild.
- Gifts to charity (registered in the UK) and political parties are normally deductible as well.
- You can also contribute up to £250 every tax year to anyone, as long as they haven’t already received a gift from you that qualifies for another exemption.
- Although these excluded sums may appear to be minor, gifting in these ways over time can make a big difference.
If you need any assistance, please do not hesitate to contact us.
If you would like any further advice, please do not hesitate to contact us:
3C Legal Limited
Tel: +44 (0) 1684 212147
Mobile +44 (0) 7707 644738
info@3clegal.co.uk