Since the introduction of the transferable nil-rate band between Spouses and registered civil partners in October 2007, many have forgotten that there are other ways to save IHT.
It is estimated that as much as 30% of all IHT collected by HMRC could be avoided quite simply.
Can you give it away?
If you have a sizeable Estate and potential IHT issue, make full use of the gift exemptions; though they are quite small, these can be useful.
- Annual gift of £3,000.00
- Small gift of £250.00
- On marriage; children, £5,000.00
- On marriage; grandchildren or other descendant, £2,500.00
- Gift to any other person of £1,000.00
Remember, if you survive for 7 years after the gift, then that gift will be completely free of IHT charges. Gifts within 7 years are subject to IHT on a sliding scale increasing to the full rate at death.
Gifts out of income
An often overlooked relief for people with sizeable income, and wealth, is to establish a pattern of giving, as normal expenditure out of income. This can establish a tax free gift pattern considerably in excess of other exemptions, and can be used to fund various investments which can grow significantly in value. You must be able to make the gift without affecting your standard of living.
You should also consult your accountant or Financial Advisor to ensure that you will qualify for Business Property Relief and Agricultural Property Relief.
Provided by Sean Barrow LL.B. (Hons)
Sean Barrow is a Solicitor with more than 30 years experience in Wills and Probate. If you wish to discuss your potential Estate and IHT liability, or wish to start planning your legacy, please contact the Office on 01625 523988 or email mail@JBGass.com