How can I make gifts to reduce my IHT liability ?

How can I make gifts to reduce my IHT liability ?

You can make lifetime gifts of any amount but if you should die within seven years of making that gift its value could be added back into your estate for inheritance tax purposes. There are a number of exemptions available for lifetime gifts allowing you to give away your assets tax-free:

  1. Any transfer between husband and wife (some limits apply where the recipient is non UK domiciled)
  2. Gifts of up to £3,000 in any one tax year
  3. Unlimited amounts of £250 – limited to one gift per recipient and cannot be used as part of the £3,000 exemption
  4. Excess income ie income received that is over and above your normal maintenance and usual standard of living costs
  5. Wedding gifts- you may each give your children £5,000, your grandchildren £2,500 or another friend or relative £1,000
  6. Gifts to National Heritage sites or projects or gifts for the public benefit
  7. Gifts to charities
  8. Gifts to registered housing associations
  9. Gifts to political parties

If your death is a result of injuries received on active service then your estate will be free of inheritance tax regardless of how long ago those injuries were incurred.

With any gifts made during your lifetime you should keep a record of the amount, the date of the gift and its recipient.   We are able to advise on the most effective way of making a gift and assist you with recording its details.

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