London: +44 (0)20 7236 2601
St Albans: +44 (0)1727 869141
Rickmansworth: +44 (0) 1923 771010
Milton Keynes: +44 (0)1908 605552

Inheritance Tax (IHT) - Ignoring exemptions could be expensive

 

Many estates are now worth more than the IHT nil rate band threshold of £285,000. With any excess potentially being chargeable at 40% it is clearly sensible for you to take full advantage of all available reliefs – always provided you can afford to do so.

Every individual can transfer up to a total of £3,000 per tax year exempt from IHT. Where gifts (if any) fall short of the £3,000, the unused amount is carried forward to the next year and added to the £3,000 allowance for that year only. This means that a couple who are married or in a civil partnership, having made no gifts in the previous year, can transfer a total of £12,000 to, say, their child, potentially saving £8,000 in IHT.

Additionally during your lifetime you can give up to a total of £250 per tax year to any one person exempt from IHT. This exemption is in addition to the annual exemption above and can apply to any number of gifts to different people provided the value of all gifts to any one individual does not exceed £250 in the year.

Gifts in consideration of marriage or civil partnership are exempt from inheritance tax up to the following limits: £5,000 by a parent or £2,500 by a grandparent or great-grandparent; or £1,000 for anyone else. I would recommend that all gifts be noted in a letter both for legal purposes and as proof for the Revenue that the gifts were made at the time stated.

One further potentially valuable exemption is normal regular gifts out of income. This is a complex area that requires a pattern of giving without leaving the donor with an income deficit. 

 

 

 

 

Date: 20th April, 2007
Author: Cathy Corns

SHARE THIS

Articles from this Author

Contact Business Service Partners

Choose from the drop down menu below to select a Partner to contact.

Tweet

Mercer & Hole’s @GudgionJa progress in @CelebJustDance - Not much longer to Waite now….. bit.ly/2gqZOZq @MKDonsSET

Mercer & Hole’s Michael Lapham impresses at the @MoneyMgmtMag Financial Planner Awards bit.ly/2yw3Ieetwitter.com/i/web/status/9…

Follow

LinkedIn

For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole

Click here to follow us on LinkedIn