Inheritance Tax (IHT) in the UK may be one of life\u2019s unpleasant facts but IHT planning and professional advice could help you pay less tax on your estate. With the current thresholds set to remain at \u00a3325,000 for individuals and \u00a3650,000 for married couples and registered civil partnerships until 2014, now is the time to consider reviewing your potential liability and finding out what you could do to reduce, or even eliminate, this burden.<\/p>\n
Everything you have of value<\/strong><\/p>\n IHT is usually payable on everything you have of value when you die, including: your home, jewellery, savings and investments, works of art, cars and any other properties or land, even if they are overseas.<\/p>\n When you die, your assets become known as your estate. Any part of your estate that is left to your spouse or registered civil partner will be exempt from IHT. The exception is if your spouse or registered civil partner is domiciled outside the UK. Then the maximum you can give them before IHT may need to be paid is \u00a355,000.<\/p>\n Unmarried partners, no matter how long-standing, have no automatic rights under the IHT rules.<\/p>\n IHT is usually payable on death but there are certain circumstances, if you put assets into certain types of trusts, for example, when IHT becomes payable earlier.<\/p>\n Taper relief<\/strong><\/p>\n Taper relief applies where tax, or additional tax, becomes payable on your death in respect of gifts made during your lifetime. The relief works on a sliding scale up to seven years and is calculated on the number of years before your death in which a transfer is made. The relief is given against the amount of tax you\u2019d have to pay rather than the value of the gift itself. The value of the gift is set when it\u2019s given, not at the time of death.<\/p>\n Writing a will<\/strong><\/p>\n One of the most important things you can do to help reduce the amount of IHT you may have to pay is write a will. If you die without a will, your estate is \u2018divided-up\u2019 according to a pre-set formula and you have no say over who gets what or how much tax is payable.<\/p>\n Gifting it away<\/strong><\/p>\n The taxman allows you to make a number of small gifts each year without creating an IHT liability. Remember, each person has their own allowance, so the amount can be doubled if each spouse or partner uses their allowance.<\/p>\n You can also make larger gifts but these are known as Potentially Exempt Transfers (PETs) and you could have to pay IHT on their value if you die within seven years of making them. Any other gifts made during your lifetime that do not qualify as a PET will immediately be chargeable to IHT. These are called Chargeable Lifetime Transfers (CLT) and an example is a gift into a Discretionary trust.<\/p>\n The taxman lets you give the following as exempt transfers:<\/strong><\/p>\n Up to \u00a33,000 each year as either one or a number of gifts. If you don\u2019t use it all up one year you can carry the remainder over to the next tax year. A tax year runs from the 6 April one year to 5 April in the next year.<\/p>\n Gifts of up to \u00a3250 to any number of other people \u2013 but not those who received all or part of the \u00a33,000.<\/p>\n Any amount from income that is given on a regular basis provided it doesn\u2019t reduce your standard of living. These are known as gifts made as \u2018normal expenditure out of income\u2019.<\/p>\n If your child is getting married you can gift them \u00a35,000, if a grandchild or more distant relative is getting married \u00a32,500, and a friend or anyone else you know \u00a31,000. What should you do to reduce, or even eliminate, an Inheritance Tax burden? Inheritance Tax (IHT) in the UK may be one of life\u2019s unpleasant facts but IHT planning and professional advice could help you pay less tax on your estate. With the current thresholds set to remain at \u00a3325,000 for individuals and \u00a3650,000 for… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1487"}],"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=1487"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1487\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe tax treatment of any investments depends on your individual circumstances and may be subject to change in the future. Past performance is not an indication of future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.<\/p>\n","protected":false},"excerpt":{"rendered":"