What You Need To Know About Inheritance Tax
This month Richard Walford talks about Inheritance Tax and ways in which you can reduce your liability.
Inheritance tax must be paid following your death at a predetermined rate, there are ways to reduce this liability via life time gifts, the main Inheritance Tax exemptions allowing tax-free lifetime gifts are:
- Gifts of less than £250 each
- Gifts of up to £3,000 per year
- Gifts made from your unspent income
- Wedding gifts (£5,000 for your child, £2,500 for your grandchild, or £1,000 for others)
- Gifts made more than 7 years before your death
- Gifts to UK charities or certain political parties
- Gifts to a spouse or Registered Civil Partner
- Gifts of “Agricultural Property” or “Business Property” (these are narrowly defined, so you should not simply assume that an asset qualifies for one of these reliefs)
There are however some potential pitfalls you need to ensure you avoid when making lifetime gifts. For example:
- If you give away an asset (rather than cash) you may have to pay Capital Gains Tax
- If you retain any benefit from the asset you gave away (e.g. keeping the income from an investment) then you will not save any Inheritance Tax, and you may make your overall tax position worse
It is important that you get detailed professional advice to ensure that your gifts will be tax effective. Get in touch with Gilbert Stephens if you would like more detailed advice regarding inheritance tax and your current financial position.
For more information visit https://gilbertstephens.co.uk/