No one likes to pay more tax than they should. Below are some of the key exemption to reduce your inheritance tax. So to kick off-
Annual Exemption relating to inheritance tax.
This allowance did not change at the budget and still stands at £3,000. This can be transferred each year without any tax consequences. If not fully used the balance can be carried forward to the next year provided that the exemption for the second year is fully used. Remember to keep a record of these and all other gifts you wish to claim an exemption for.
Gifts on marriage.
A gift of £5,000 can be given by each parent on the marriage of their child. In addition, each of the grandparents can also gift £2500. Others can make gifts of up to £1,000 also.
Small annual gifts
There is no limit to the number of small gift up to £250 can be made without attracting tax.
Potentially exempt transfers.
Gifts regardless of the size can be made to individuals more than seven years before the death of the donor. The gift will become exempt from inheritance tax after seven years. This is known as a potentially exempt transfer (PET). If the donor dies within the seven years the amount of tax payable will be progressively reduced.
Regular gifts from surplus income.
Regardless of the size, gifts made on a regular base can be made out of surplus income. You must be able to show that these gifts do not affect the donor’s normal standard of living. It’s important to maintain accurate records of the donor’s income and expenditure together with the gifts made.
Gifts to charities.
A gift to a United-Kingdom based charity is exempt. There is no limit on the amount.
In addition, if the sum donated to charity exceeds the nil rate band by 10% or more the rate of inheritance tax (IHT) payable on the estate will be reduced from 40% to 36%. This is not 105 of the value of the estate just 10% of the excess over the nil rate band. To find out more speak to one of our expert financial advisers.
Transfers between spouses.
Transfer of assets between husband and wife or civil partners during their lifetime or on death are exempt from inheritance tax.
How Anstee & Co can help you with Inheritance Tax
In conclusion, the above gives you a feel of the key exemption when looking at estate planning. To find out more and how Anstee & Co can help you, contact us today to arrange your free initial appointment. Anstee & Co have offices in Kettering, Stamford and London. Meeting rooms in Warwick and Bedford. Appointments can also be arranged at you home and at a time convenient to you.