There are some important exemptions that allow you to legally pass your estate on to others, both before and after your death, without it being subject to Inheritance Tax.<\/p>\n
Exempt beneficiaries<\/strong> – your husband, wife or civil partner, even if you\u2019re legally separated (but not if you\u2019ve divorced or the civil partnership has dissolved), as long as you both have a permanent home in the UK<\/p>\n – UK charities<\/p>\n – some national institutions, including national museums, universities and the National Trust<\/p>\n – UK political parties<\/p>\n But, bear in mind that gifts to your unmarried partner or a partner with whom you\u2019ve not formed a civil partnership aren\u2019t exempt.<\/p>\n Exempt gifts<\/strong> Wedding gifts\/civil partnership ceremony gifts<\/strong> – parents can each give \u00a35,000<\/p>\n – grandparents and other relatives can each give \u00a32,500<\/p>\n – anyone else can give \u00a31,000<\/p>\n You have to make the gift on or shortly before the date of the wedding or civil partnership ceremony. If it is called off and you still make the gift, this exemption won\u2019t apply.<\/p>\n Small gifts<\/strong> But you can\u2019t give a larger sum \u2013 \u00a3500, for example \u2013 and claim exemption for the first \u00a3250. And you can\u2019t use this exemption with any other exemption when giving to the same person. In other words, you can\u2019t combine a \u2018small gifts exemption\u2019 with a \u2018wedding\/civil partnership ceremony gift exemption\u2019 and give one of your children \u00a35,250 when they get married or form a civil partnership.<\/p>\n Annual exemption<\/strong> You can\u2019t use your annual exemption and your small gifts exemption together to give someone \u00a33,250. But you can use your annual exemption with any other exemption, such as the wedding\/civil partnership ceremony gift exemption. So, if one of your children marries or forms a civil partnership you can give them \u00a35,000 under the wedding\/civil partnership gift exemption and \u00a33,000 under the annual exemption, a total of \u00a38,000.<\/p>\n Gifts that are part of your normal expenditure – monthly or other regular payments to someone, including gifts for Christmas, birthdays or wedding\/civil partnership anniversaries<\/p>\n – regular premiums on a life insurance policy (for you or someone else)<\/p>\n It\u2019s a good idea to keep a record of your after-tax income and your normal expenditure, including gifts you make regularly. This will show that the gifts are regular and that you have enough income to cover them and your usual day-to-day expenditure without having to draw on your capital.<\/p>\n Maintenance gifts<\/strong> – your husband or wife<\/p>\n – your ex-spouse or former civil partner<\/p>\n – relatives who are dependent on you because of old age or infirmity<\/p>\n – your children (including adopted children and step-children) who are under 18 or in full-time education<\/p>\n Potentially exempt transfers<\/strong> Gifts that count as a PET are gifts that you, as an individual, make to:<\/p>\n – another individual<\/p>\n – a trust for someone who is disabled<\/p>\n – a bereaved minor\u2019s trust where, as the beneficiary of an Interest In Possession (IIP) trust (with an immediate entitlement following the death of the person who set up the trust), you decide to give up the right to receive anything from that trust or that right comes to an end for any other reason during your lifetime<\/p>\n Only outright gifts count as PETs<\/strong> In some circumstances a gift with strings attached might give rise to an Income Tax charge on the donor based on the value of the benefit they retain. In this case the donor can choose whether to pay the Income Tax or have the gift treated as a gift with reservation.<\/p>\n","protected":false},"excerpt":{"rendered":" Tax-efficiently passing on parts of your estate There are some important exemptions that allow you to legally pass your estate on to others, both before and after your death, without it being subject to Inheritance Tax.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1413"}],"collection":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1413"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1413\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1413"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1413"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1413"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nYou can give things away to certain people and organisations without having to pay any Inheritance Tax. These gifts, which are exempt whether you make them during your lifetime or in your will, include gifts to:<\/p>\n
\nSome gifts are exempt from Inheritance Tax because of the type of gift or the reason for making it. These include:<\/p>\n
\nWedding or civil partnership ceremony gifts (to either of the couple) are exempt from Inheritance Tax up to certain amounts:<\/p>\n
\nYou can make small gifts, up to the value of \u00a3250, to as many people as you like in any one tax year (6 April to the following 5 April) without them being liable for Inheritance Tax.<\/p>\n
\nYou can give away \u00a33,000 in each tax year without paying Inheritance Tax. You can carry forward all or any part of the \u00a33,000 exemption you don\u2019t use to the next year but no further. This means you could give away up to \u00a36,000 in any one year if you hadn\u2019t used any of your exemption from the year before.<\/p>\n
\nAny gifts you make out of your after-tax income (but not your capital) are exempt from Inheritance Tax if they\u2019re part of your regular expenditure. This includes:<\/p>\n
\nYou can also make Inheritance Tax-free maintenance payments to:<\/p>\n
\nIf you, as an individual, make a gift and it isn\u2019t covered by an exemption, it is known as a potentially exempt transfer (PET). A PET is only free of Inheritance Tax if you live for seven years after you make the gift.<\/p>\n
\nIf you make a gift with strings attached (technically known as a gift with reservation of benefit), it will still count as part of your estate, no matter how long you live after making it. For example, if you give your house to your children and carry on living there without paying them a full commercial rent, the value of your house will still be liable for Inheritance Tax.<\/p>\n