Inheritance Tax Mitigation

Maximise Your Estate with Effective Inheritance Tax Planning

Inheritance tax (IHT) is a tax that is levied on the value of an individual’s estate when they die. It is currently charged at a rate of 40% on the value of an estate above a certain threshold (currently £325,000, also known as the nil-rate band). However, there are several ways in which individuals can mitigate their IHT liability.

Annual Gifts: An individual can give away up to £3,000 per year without incurring an IHT liability. This is known as the annual exemption.

Gifts out of Income: An individual can make gifts out of their regular income without incurring an IHT liability, as long as the gifts do not affect their standard of living.

Potentially Exempt Transfers (PETs): An individual can make a gift that is exempt from IHT if they survive for seven years after making the gift. This is known as a Potentially Exempt Transfer (PET).

Lifetime Gifts: An individual can make gifts that are immediately exempt from IHT if they are made to certain types of trusts or to individuals who are getting married or setting up home for the first time.

Business and Agricultural Property Relief: Certain types of business and agricultural assets can qualify for relief from IHT, which can reduce the value of an individual’s estate for IHT purposes.

Trusts: Certain types of trusts can be used to reduce an individual’s IHT liability. For example, a discretionary trust can be set up to hold assets for the benefit of future generations.

It’s important to note that the rules and regulations surrounding IHT mitigation can be complex, and it is recommended that individuals seek professional advice to ensure that they are taking advantage of all available opportunities to reduce their IHT liability. Additionally, tax laws are subject to change, so it is important to stay up to date with any changes that may affect your IHT planning.

For further advice on Inheritance Tax Mitigation from experts that specialise in dealing with all aspects of estate planning, please contact us through our confidential online enquiry form or telephone 01327 317388