IHT receipts have increased for a variety of reasons, including the impact of rising property prices, meaning more families falling within the range of IHT. While thresholds remain frozen at current levels – the nil-rate band is £325,000 and the main residence nil-rate band is £175,000 – IHT can effectively be regarded as a stealth tax.
Your IHT refresh
Strategies to reduce the amount of IHT payable include:
– Gifts – use your £3,000 annual allowance before the end of each tax year. You can also make gifts of up to £250 per person per tax year, rules apply
– Leave money to charity – if you leave at least 10% of your net estate to charity, the IHT rate reduces from 40% to 36%
– Make a Will – and keep it up to date by choosing who you pass your estate onto
– Trusts – for example putting money into a trust to pay for a grandchild’s education or to support another relative
– Take out life assurance – this won’t reduce your estate but instead provides a lump sum to your beneficiaries to pay the IHT bill. The policy should be written under a suitable trust
– Take advice – sensible IHT planning can help to reduce the amount of IHT your beneficiaries pay and safeguard your wealth for the future.