You may be interested in cutting inheritance tax bills that might be levied on your estate after you pass away. More and more Britons are finding their assets subject to the inheritance tax as house and property prices continue to rise, yet the tax threshold only follows at a far slower increase. Since the tax can take a substantial chunk of money from the legacy that you are planning to leave to your family, cutting inheritance tax can really help with providing for your loved ones after you are gone.
When it comes to cutting inheritance tax, there are numerous options open:
- Remaining below the threshold of £312,000. It is only the value of an estate in excess of this amount which is subject to the 40% inheritance tax.
- Exemptions. By making use of gifts and asset transfers that are subject to inheritance tax exemptions, you can reduce the value of taxable estate. Exemptions include an annual £3,000 gift exemption, £250 per person per year small gifts exemption, wedding gifts exemptions, and other possible options as well.
- Potentially exempt transfers. Those gifts and transfers which do not fall under other exemptions and which are made in the seven years leading to your death can still be subject to inheritance tax. However, as the years pass the tax rate on them falls, and if you survive for seven years after making a gift or transfer, it becomes fully exempt. Note, however, that gifts from which you still draw a benefit – known as gifts with reservation – remain taxable.
- Trusts and life assurances. These allow you to place a portion of wealth out of your estate, and thus possibly exempt from inheritance tax, while still ensuring that a spouse, children or other beneficiaries will receive support and capital after you have passed away.
For advice on cutting inheritance tax and other inheritance matters, fill out our online enquiry form – we will then put you in touch with expert UK financial consultants, who are offering a free, no-obligations initial consultation.