Inheritance Tax (IHT) is paid on the value of the deceased's estate that exceeds a threshold of £325,000 (2017/18).
Ensure you make a Will
Making a will ensure that your assets are distributed in accordance with your wishes. This is particularly important if you have a spouse or civil partner, as there is no inheritance tax payable between the two of you. However, there could be tax payable if you die intestate. Without a will, assets could end up going to other relatives.
Make allowable gifts.
In a single tax year, you can give cash or gifts worth up to £3,000 which will be exempt from Inheritance Tax.
You can carry forward any unused part of the £3,000 exemption to the following year - but then you must use it or lose it.
Parents can give cash or gifts of up to £5,000 when a child gets married, grandparents up to £2,500 and anyone else up to £1,000. Small gifts of up to £250 a year can also be made to as many people as you like.
Give away assets
Parents are increasingly providing children with funds to help them buy their own home. This can be done through a gift and provided that the parents survive for a subsequent seven years, the money automatically ends up outside their estate for inheritance tax calculations.
Make a gift out of normal expenditure
Gifts from normal expenditure can be exempt from IHT. If it is used wisely, this can be exceedingly generous.
The exemption is only restricted by the transferor's personal circumstances, in that they must have sufficient income remaining after making a gift out of normal expenditure so as to maintain their usual standard of living.
Inheritance tax and it's mitigation is complex. For more information regarding any of our tips and for other ways to mitigate your tax liability contact us before making any decision.