If the value of your assets exceeds the Inheritance Tax Threshold (currently £325,000), there is a risk that your estate will have to pay Inheritance Tax.
This may seem a high amount, but when you take into consideration your savings, residential property, car, jewellery and house contents, you may be surprised at just how much you are worth.
If the value of your assets is above £325,000, you will have to pay 40% in tax to the Government.
Inheritance Tax | Nottingham Solicitors
We can help to reduce the amount of inheritance tax you will have to pay. Our team of tax solicitors will explain the options and prepare a tax busting plan, tailored to your specific circumstances.
What amount can I gift each year without any IHT implications?
Each person has an annual exemption for Inheritance Tax running from tax year to tax year. This is currently set at £3,000 (in total NOT per gift). If this allowance was not used in the previous year, then the allowance can be carried forward for one year only giving you a maximum allowance of £6,000.
Can I make gifts of more than £3,000 to avoid paying Inheritance Tax?
There are strict rules rigorously imposed by HMRC in relation to gifting to avoid paying Inheritance tax. As a general rule, you must survive a period of seven years from the date of the gift for its value to escape IHT, and you must not retain any benefit at all in the asset gifted. If you die within this seven year period, the value of the gift will be included in your estate when assessing if Inheritance Tax should be paid.
If I gift everything to my Husband / Wife, is IHT payable?
No. Any gift to a Husband or Wife (domiciled in the UK) is exempt of Inheritance Tax as such gifts qualify for what's known as spouse exemption.
I'm a widow / widower, can I use my late spouses tax allowance?
Yes. Since October 2007 a surviving spouse has been able to claim any unused Inheritance Tax allowance of their late husband / wife in addition to their own allowance.
Are all of the assets in my estate subject to Inheritance Tax?
Generally yes. This would also include any assets which you may hold abroad, assuming that your are domiciled in the UK for tax purposes. However, business and agricultural assets may qualify for certain exemptions depending on the circumstances.
I want to make gifts to charity, what are the IHT consequences?
Any gift to a Charity (recognised by HMRC) is exempt of Inheritance Tax. If as a result of charitable giving, 10% or more of your net estate is left to a charity, your estate will also benefit from a discounted rate on the IHT payable on the rest of your estate (currently 36% instead of 40%).
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The Legal 500 2021: Personal Tax, Trusts & ProbateActons undertakes a wide range of matters concerning wills, trusts and estate planning for individuals, farmers and business owners. Its team has notable expertise in contentious work, including contentious probate and Court of Protection applications. The firm has a strong presence in the charities sector and is associated with Age UK Nottingham & Nottinghamshire and Reach Learning Disability...the team is now led by ... Bindiya Patel and Heather Parker; the latter was a key hire from Rotheras.