Estate and Inheritance Tax Planning

Inheritance tax (or Estate Duty as it used to be called) has been with us for some time. In the old days, very few people paid these taxes as their estates did not exceed the exemptions available. Nowadays, with the value of the average family home in the South East being between £200,000-£300,000 and in many cases, substantially more, it doesn't take much to get to a level where tax is payable.

Inheritance tax planning is not just something for the future it is something for the present as well. Most people have heard about the 'seven year rule' and, even though they have heard about it, they probably do not fully understand how it works. But what about other allowances?

You can give away annual gifts of £3,000 (or £6,000 if you did not make any gifts in the previous year) and they will not form part of your Estate for inheritance tax, but did you know that you can also give away any number of amounts of £250 in a tax year to separate individuals (except those receiving the £3,000/£6,000) as a small gift, as well as making gifts on Marriages. There are also rules that allow you to make gifts to Charities and Political Parties but, as with all taxes, there are special rules that need to be kept in mind when making gifts if you do not want an unpleasant surprise from our friends at HM Revenue & Customs.

Of course, there are plans required for the larger picture and, even though recent changes have actually made things a little easier for the majority of people, there are still ample opportunities for tax savings for those whose estates are more substantial.

So if you are thinking of making gifts but want to make sure that they are given in the most tax efficient way, then make sure you talk to us before you make the gift as, afterwards, it may be too late. Alternatively, if you are looking at the end position, let us give you some guidance to minimise the tax that your estate may have to bear.