Inheritance Tax and Lifetime Gifts

Common exemptions to Inheritance Tax (IHT):

  • Gifts between spouses (Except if a British domicile passes his estate to his or her non domicile spouse, where the allowance is the Nil Rate Band (NRB) plus £325,000, presently £650,000)
  • Gifts to charities and political parties (Go to the gifts to charities page to understand how the reduced rate of IHT at 36% applies if you make charitable gifts, which might well reduce the overall cost to your net estate)
  • Annual gifts of £3,000 per donor (Therefore, a husband and wife can give away £6,000 each year)

Potentially exempt transfers (PETs)

Unlimited gifts to individuals (For example to your children, provided that you see no further benefit and live for a further 7 years)

Transfers to trusts for the benefit of others

Transferring assets to trusts for the benefit of others (excluding your spouse), of up to the present Nil Rate Band (£325,000) every 7 years. Husband and wife can gift up to £650,000 each for the benefit of their children and grandchildren every 7 years.

The above list is not exhaustive and we recommend that you contact us for further information on your particular situation.

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