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Simple Planning For Inheritance Tax IHT

Simple Planning for IHT (Inheritance Tax)

We all know that we should have a valid Will and of course we all know that reviewing the Will regularly makes sense, don’t we?

But what about all of the other simple things that can make things easier for your family?

Take inheritance tax for example (you know the government will!). Were you aware that each of us can make small gifts to whomsoever we choose, every year without being taxed?

A single gift each tax year of £3,000 can be placed in the hands of your chosen beneficiary and if you haven’t already given last year you can add a further similar amount.
Every time you use this gift allowance your estate can save £1,200 in inheritance tax. That’s £2,400 per couple or if you haven’t given before £4,800 per couple of tax saved just this (including last) year. That’s a reasonable first car or the start of a house deposit.

Is there a wedding coming up? wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child) also pass by the inheritance tax trap.

If you can afford the annual gift you might also like to give as many smaller gifts of up to £250 to as many people as you like each year on top.
Luckily for some, the amount of income that a person receives each year that isn’t used and, importantly, would not affect their normal lifestyle, if given away, can be diverted to chosen beneficiaries without suffering any further taxes.

You can also make much larger gifts either directly to individuals or, in a more limited fashion, to trust. However, such large gifts only become tax efficient if the giver (donor) survives a full 7 years.

Take care though, any large gifts made the past 7 years might be caught together with the new gift if the donor dies early.
And make sure that you cannot benefit in any way from any large gift you might make. Reserving any kind of benefit can completely negate your good planning intentions.

Make notes, keep proof, be certain.

So those are the simple things. For anything more complicated, drop us a line.

Kept assets – Pass it on…….

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