Distributing assets as gifts during a person’s life can be an effective way of reducing the value of an estate and therefore limiting the total amount of inheritance tax due.
The amount that can be gifted on an annual basis, by law, amounts to £3,000 in total, which may be carried over by a maximum of one year to £6,000. If the giver dies within seven years of the gift, a sliding tax scale of between eight per cent and 40 per cent applies, depending on the length of time.
Between spouses, inheritance tax on gifts does not apply and a partner can assume the deceased’s allowance. Giving a home as a gift to a direct relative is another way of avoiding inheritance tax, providing the benefactor lives for seven years after the home is passed on.
Various rules and exemptions apply beyond these basic terms and Lycetts is an expert in helping clients to navigate the nuances of gift giving to achieve a reduced tax liability.
If you still have questions abouts gifts and inheritance tax, please get in touch with our professional advisers today.