As with business plans, reviewing your personal finance plans will help you to make the most of your money. Inheritance tax (IHT) is an area that many overlook, but planning ahead is essential to make sure you don’t get caught out by hefty taxes.
Points to bear in mind include:
- Inheritance tax is payable on the sum of a person’s assets at death, plus any gifts that have been made within the last seven years, that exceed the current threshold of £325,000;
- Gifts of less than £3,000 per tax year are exempt from IHT;
- Regular gifts from income are also exempt from IHT as long as they do not reduce the usual standard of living and capital is not used;
- Gifts to registered charities and the major political parties are exempt.
The draft clauses of the Finance Bill 2012, also set out legislative plans to provide a reduction in the rate of IHT from 40 per cent to 36 per cent, where 10 per cent or more of an estate is left to charity. This is due to take effect from 6 April 2012.
We can help you to review your inheritance tax planning to avoid unexpected tax bills. Please contact us for more information.