Inheritance Tax Planning

MJSW

The £3,000 can be gifted to absolutely anyone. Don't forget though that it is only £3,000 in total per tax year, not a £3,000 gift to each person (although you can also use the unused part the the allowance from the previous tax year as well).

Finishrich

I've just read Martins article again and my understanding is your can give away £3000 per year plus £250 each to as many peope as your like  Can anyone verify this?

MaryC

Yes that's right, Finish Rich. You can gift £3,000 pa to anyone (and also the £3,000 from the preceding year only, if you have not used it). There is also a small gifts exemption of £250 per year but this can be gifted to as many people as you like. Warning though, you can't gift £260 and deduct the £250 leaving a chargeable gift of £10 - the whole £260 then becomes chargeable.

klondyke

Also, the people who receive £250 cannot be the same people as those who benefit from the £3000 allowance.

Robert_Sterling_3

Hi,

My Father has recently passed away  :'( and has left his entire estate to my mum.  Together this is worth about £500,000.  I have just completed Probate, but have been told that I should look to do a deed of variation on my dads will, so the money he has passed can be put in trust, to avoid the IHT when my Mum passes.  Is this easy to setup by myself, or should I really use expert advice?

Regards
Neil

You could save in the region of £100,000 by a deed of variation but you need professional advice on this matter. If you have £250,000 as a result of the deed of variation where exactly will the money come from?
There are ways round this problem but it is not all plain sailing.
Beware of "gifts with resevation" and other pitfalls

vasantha

In common with nearly all advice on inheritance tax, it assumes that you have children to consider in efficient planning. How about some advice for childless couples with aged family i.e. no real beneficiaries. It's tempting to spend it all, but as you don't know how long you will leave, it's difficult to pace. Not wanting to leave an IH Tx headache for surviving relatives is high on our list. Is it correct that you can make a bequeth to a charity for an unspecified amount i.e. whatever amount it takes to eat up the IH tx threashold and therefore leave the estate outside of it. There must be others out there with the same dilema.

Finishrich

So just to clarify how would this work:


the nil rate band is £263,000 and The estate is worth £300,000.

If £37.000 is given to a charity leaving £263,000 does that mean no inheritance tax is due or do they tax the £300,000 first meaning they take their £14,800 in tax, before anything goes to charity?

Robert_Sterling_3

If you leave ANY money to a charity then that money goes out of your estate and goes to the charity ( or political party ) and no Inheritance tax is paid by the charity or by you.

Your estate is no longer £300,000

It is now £263,000 and so it is not liable to any tax whatsoever.

MJSW

Another point worth making is that if you intend to give money to charity in your will, it is generally more tax efficient to gift the money before you die instead. This is because if you make a Gift Aid declaration, the charity can claim back Income tax on the gift (as long as your tax liability covers the tax reclaim). If you are a higher rate taxpayer, you would also get a reduction in your Income Tax bill too. But charities can't claim back any Income Tax on legacies left to them in wills.

Of course you should only do this if you are certain you won't need the money again before you die, as you can't ask for it back! (Well I suppose you can ask, but are unlikely to get it!)

Cornwall_2

Martin,
As my second husband and I both have children from previous marriages we own our house as 'tenants in common' with our wills made out that the when one of us dies the half share is passed onto the other until the event of the other one's death.
The will reads - 'In the event of his/her death I give all my share and interest in ..(address) to my children (names).
As the address is printed does this mean that the surviving one of us is tied to the house we now live in and not able to move if required ????