Calculated on the value of your estate when you die, and the value of assets you have given away or put into trust during the previous seven years, Inheritance tax (IHT) can be reduced or even eliminated entirely if planned for correctly. The Wills and Probate solicitors at Bannister Preston Solicitors LLP can assist in reducing your inheritance tax, with considerations that may include;
Allowances and exemptions
Standard allowances and exceptions are set for Inheritance Tax allowance, allowing planning and considerations for, including;
- IHT is not payable on the ‘nil-rate band’ (currently £325,000).
- From April 2017, an additional nil-rate allowance will allow main family homes to be passed to direct descendants.
- Any assets you pass on to your spouse or registered civil partner are exempt from IHT.
- Gifts to registered charities are exempt from IHT, including organisations such as churches and museums.
Gifts made out of the seven years prior to death are exempt of inheritance tax, providing an effective way to share your estate. Considerations include;
- An annual exemption allowing you to give away up to £3,000.
- Small gifts of up to £250 can be given to as many individuals as you like.
- Cash gifts can be given up to £5,000 to your child, or £2,500 to a grandchild
The treatment of trusts and tax can be complex, with many contributing factors including the type of trust, the value of the assets put into it, and who the beneficiaries are. Considerations include;
- assets that will pass to a child until they are older.
- assets to eventually pass to your children, but benefit your spouse for the rest of his or her life.