There are seven Inheritance Tax Exemptions and Allowances you should be aware of?

  • You can give away up to £3,000 free of Inheritance Tax each tax year.  This is known as your ‘annual exemption’.  A clever way to use this exemption is to fund a whole of life policy written in Trust for your children.

  • You can also make any number of small individual gifts worth up to £250 in any one tax year on top of your £3,000 allowance and no IHT will be due on them.  You can’t give one of these to anyone you’ve already given your £3,000 allowance to.  This is a small allowance but it is always worth considering.

  • You can make normal gifts out of your income free of IHT, so long as it does not reduce your standard of living.  This is a really useful exemption but is seldom used.

  • You don’t have to pay IHT on a wedding or civil partnership gifts worth up to £5,000 if given to your child, £2,500 if you’re making a gift to your grandchild or great-grandchild or £1,000 if you’re making the gift to someone else.

  • You can give away larger financial sums if you want to, but you must live for at least seven years from the date of the gift for it to be free of IHT.  These gifts are known as ‘potentially exempt transfers.  Gifts made 3 to 7 years before your death are taxed on a sliding scale known as Taper Relief however Taper Relief is not as good as it sounds.

  • If you have direct descendants, you’re entitled to an additional Residence Nil Rate Band allowance which was introduced in April 2017.  The allowance will be up to an extra £175,000 by April 2020.  This is a really useful allowance if used in appropriate circumstances.

  • IHT rules for married couples or civil partners mean that you can transfer their estate to your spouse free of IHT when you die, along with any IHT allowance which you haven’t used.  This means when the surviving spouse or partner dies, they could have a total potential IHT allowance of up to £650,000.

We provide our expert IHT advice service to clients throughout England, Wales and Scotland.  In an average month we see about 10 clients.  Their total assets are about £15.5 million.  Their total IHT liability is about £4.1 million and our advice can save them about £2.8 million.  That’s just in one month.

 

So why not arrange a chat with one of our Consultants. 

 

 Just call  0800 852 1999 or email us at contactus@mcclure-solicitors.co.uk

Home visits are available. 

McClure Solicitors in association with McClure Wealth Management