There are plenty of inheritance tax exemptions that can be used to reduce the amount of money that your estate may be taxed on in the event of your death. By wisely managing your finances, you may find that you can mitigate or entirely avoid having to pay inheritance tax, which is a burden that is weighing upon an increasing number of UK residents as housing values continue to rise.
Some exemptions include:
- £3,000 per year in gifts.
- £250 per person per year in small gifts.
- Gifts for wedding or civil partnership ceremonies – the exact amount varies depending on your relationship with the new couple.
- Donations to charities and political parties.
There are other inheritance tax exemptions as well. A spouse or civil partner can inherit your estate without any tax levied on the transfer. Also, partially exempt transfers (PETs) are gifts not covered by the exemptions above and which are initially subject to IHT but which have reduced taxation imposed over the course of 7 years, after which they become exempt.
Trusts and life assurance can also be used to remove substantial sums of money from your estate and establish them in a separate fund, to the benefit of your inheritors and to the exemption of IHT.
For more information on inheritance tax exemptions and how to make use of them for your estate, fill out our enquiry form and we'll put you in touch with qualified UK financial experts who are offering a no-obligation, free first consultation on inheritance tax matters.