Using Simple IHT Allowances and Gifts
You can take some simple actions to reduce your liability to inheritance tax.
Using Simple IHT Allowances and Gifts
Depending on how you feel about inheritance tax you can take some simple actions to reduce your liability to inheritance tax.
Because you are only lending the trust your capital to make some money, you are not actually giving your assets away and therefore not reducing the value of your estate. The benefit of this is that the money the trust makes will be outside your estate thereby reducing or even stopping the rate your estate is growing.
If you are looking for an IFA for Exeter or beyond, we at My Money People are here to help you with simple IHT allowances and gifts.
Other exemptions that could be considered include gifts to:
A qualifying charity
Museums, universities and the national trust
UK political parties
Keep track of your gifts
Sorting out our own financial affairs can be bad enough. Dealing with someone else's when they are no longer around to ask a question is even worse. As an IFA for Exeter and beyond, we would advise anyone making gifts whether they are large single gift or lots of small regular payments, to keep an accurate record of the gift and the exemption that you have used for your executor. It may also be useful to keep your tax returns available so that your representative is able to prove that the regular gifts came from income and did not affect your lifestyle.
One of the easiest ways to reduce your inheritance tax bill is by making sure that you use the annual exemption. You can gift £3,000 every tax year without attracting IHT or having to wait for 7 years before it has left your estate. Both partners are able to do this each year. If you have forgotten, or did not have the money, in the previous tax year you can give away double the amount. You can't go back more than one year for unused allowances.
Wedding and civil partnership ceremonies trigger additional IHT gift exemptions that should be considered, Parents of the happy couple can each gift £5,000 and Grandparents £2,500 each. Care should be taken as the gift must be made close to the time of the wedding and in the event of the wedding being cancelled the exemption to IHT will not apply.
Small gifts of up to £250 can be made to as many individuals as you wish, however gifts over £250 have no exemption at all. Regular gifts and payments that form part of your normal expenditure can be exempt from inheritance tax. However these gifts must be paid from income after you have paid income tax and may not be made from capital. If the gifts are deemed to reduce your standard of life they may lose their exemption. The gifts must be regular, but not necessarily monthly. They could be the same amount each Christmas or birthday for example and could include the premiums for a life insurance. If you are looking for assistance with your IHT allowances and gifts, as an Exeter based IFA we are here for you.
Are you looking for an IFA in Exeter?
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Pick up the phone and speak with one of our Exeter based independent financial advisors today who will be happy to answer your questions. Alternatively, leave our IFA team a message and we will get back to you as soon as possible.
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