Inheritance Tax ("IHT") is the tax paid on your estate when you die. Your estate includes everything you own such as savings, property, investments, bank deposits and possibly gifts that you have made in the last seven years.
Currently IHT is payable at the rate of 40% on all assets over £325,000. If you think your estate exceeds the IHT threshold – or could do so in the future, speak to us. There is plenty you can do now to plan in advance.
‘Gift’ your assets
There are various ways to use your gift allowance, such as:
- gifting up to £3,000 to an individual per tax year
- using income to fund the contributions of a life policy held in trust
- giving up to £5,000 as a gift to your children shortly before or on the date of their wedding or civil partnership ceremony
- giving a lifetime gift of capital designed to maintain a dependent
IHT rules say that you must survive a gift by seven years for it to be effective. Provided you do so, there will be no tax to pay on your death.
Discounted Gift Trusts are another way to help reduce your IHT liability. They allow you to make a tax-efficient gift whilst retaining the right to receive regular cash payments for life.
No one enjoys giving their money to the tax man so it is important that you plan legitimately whilst remaining in control of your assets.
RSM Tenon can include your legal team with this planning, with the ultimate aim of reducing the amount of tax to pay at 40%.
Why would you need it?
- You wish to minimise your inheritance tax bill
- You want to understand and make sensible choices about your future that will help to reduce the amount of tax you pay