Inheritance Tax Exemption

An inheritance tax exemption is an allowance for a particular transfer, transaction, gift or asset to remain untaxed in the event of your death.  Inheritance tax can hit hard on the legacy you intend to leave for your loved ones, especially as rising house prices cause more homeowners than ever to be subject to it, and so making wise use of an inheritance tax exemption can greatly help to preserve your estate from the tax man's grasp.

An inheritance tax exemption can include the following:

  • The first £312,000 in value of an estate is exempt.
  • £3,000 annual gift exemption.
  • £250 small gifts exemption per recipient per year.
  • Wedding and civil partnership gift exemption, with the exact maximum sum varying depending on your relationship to the new couple.
  • Spousal inheritance is completely exempt.
  • Trusts and life assurance can be used to create exempt sums of capital.
  • Gifts and transfers that are not otherwise exempt will become so after a period of 7 years since they were given.

Be careful of gifts with reservation – these are gifts that you make which you continue to benefit from, with the classic example being giving a house to your children while you carry on living there, paying no or below-market-value rent.  These gifts are still subject to inheritance tax.

If you are worried that there may be tax to pay on your estate after you pass away, we can help.  For advice and information on an inheritance tax exemption and other inheritance matters, fill out our enquiry form and we will put you in touch with professional UK financial consultants, for a free initial consultation with no obligations.

Disclaimer: Every effort is made to keep the site accurate, however please bear in mind that tax rates are subject to change. If you require tax advice you should speak to a professional tax adviser.