Will Writer

10 ways to lower Inheritance Tax

  1. Transfer assets to your spouse or civil partner
Transfers between spouses or civil partners are exempt from IHT, and providing you leave your entire estate to your spouse/CP, on your death, your spouse/CP will have 2 allowances to use at the date of their death
  1. Give early
Any money you give away is tax-free providing you live for the following 7 years. This is called a potentially exempt transfer or PET. It is also a great experience to see your family enjoying the benefit of your money
  1. Use your annual allowances
Every tax year you can give away 3,000. If you havent done it before, you can go back a tax year as well. You can also give any number of gifts up to 250 per person per year. Gifts of up to 5,000 to a child who is getting married are also free of tax, and for grandchildren its 2,500
  1. Invest in AIM listed shares
This is the Alternative Investment Market (like the FTSE) and provided youve held shares in an AIM company for 2 years, theyll be IHT-free, and contrary to general opinion, there are some very good companies in the AIM its worth a look
  1. Build up exempt assets
Certain types of asset can be passed on either tax-free or at a reduced rate, examples are some business assets, woodland, farmland and even National Heritage property
  1. Give to charity
By far better for a charity to have it than the Government. You could consider giving everything you own above the nil rate band to charity and the rest to other family and friends, or all of it to charity
  1. Invest in a discounted gift trust, DGT
If life expectancy isnt good, a DGT is a good idea as there will be an immediate amount of the money invested in the trust labeled as exempt from IHT
  1. A Gift and loan trust
This scheme is ideal for younger clients with an Inheritance Tax problem who want to retain easy access to their capital but also aim to achieve Inheritance Tax savings on the growth of their investments held within the Trust
  1. Solicitor controlled PET trust
This is effectively you giving money away down to your adult childrens trust, and the trustees managing it the way you want. So given 7 years you wont own it but you will still have full control.
10. Spent it After all, it is your money, you earned it! Given the choice, most of us would spend every last penny than see the Government get their grubby mits on it the trouble is none of us know in advance when our time is up but do give it a serious thought

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What can you do about it?

Let us talk you through the options. This is a complex issue so we will need to assess your personal situation very carefully to make sure you get the right advice.

Contact us now to arrange an initial discussion.

 

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