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This 'Minimising Inheritance Tax' sheet is one of the enclosures that is contained in the initial pack which you will give to your client at the first meeting. You should familiarise yourself with the contents, in case your client has any questions. 
MINIMISING INHERITANCE TAX 
 
NIL RATE BAND 
Currently each individual in the UK has a tax free allowance of £325,000. Upon death, if assets are left to your spouse, no matter the value, this would be a tax exempt transfer. A husband/wife’s allowance automatically transfers to their spouse giving the surviving spouse a tax free allowance of £650,000 to use upon their death. 
 
RESIDENCE NIL RATE BAND 
From April 2017, there is an additional allowance, starting at £100,000 and increasing gradually to £175,000 in 2020/2021. This additional band is available to estates which include a residential property which is being left directly to children or grand-children. 
 
ANNUAL ALLOWANCES 
You may give away up to £3,000 per tax year which is automatically exempt from IHT. This exemption can be carried back from one tax year (if unused). Anything above this amount will be subject to IHT if you do not survive for more than seven years after making the gift. 
 
SMALL GIFTS 
You may gift up to £250 to any one recipient without this affecting your annual allowance. For example, if you had 4 grand-children, you could give each of them £250 a year on their birthday and this would not form part of your taxable estate, or use up your annual allowance for IHT purposes. 
 
GIFTS TO CHARITY 
Many people leave gifts to charities in their will and these gifts are exempt from IHT. In addition, if at least 10% of your net estate is left to charity, the rate at which IHT is charged reduces to 36% from 40%. 
 
GIFTS FROM INCOME 
You may give money regularly, for example to a friend or family member, directly out of a source of income such as a pension or earnings. This is usually exempt from IHT as long as the gift does not adversely affect your own lifestyle. 
 
LIFE COVER 
Taking out a 'Whole of life’ insurance policy is one of the most straightforward ways of putting money aside to cover an anticipated IHT bill. The money invested in the policy will not form part of your estate for IHT purposes as it will be written in trust and paid outside of your estate. 
 
If you believe your estate may be worth over £325,000 (or £650,000 for married couples) it is highly advisable to seek tax planning advice from an IHT specialist. 
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