How to avoid inheritance tax?

masters02

Hi all,

Simple situation: my mother intends to avoid inheritance tax on her estate that is over £600k. We are aware that we can make annual gifts of £3000, but that won't suffice for us. So, how can she avoid paying inheritance tax on her estate?

I myself will be moving abroad and not returning to the UK. Would I have to pay inheritance tax on gifts from my mother (over £3000 p.a.) after she is deceased?

Any advice is much appreciated!

getmore4less

Estate pays IHT in the first instance.

True gifts become PETS so 7 years and they become exempt.
(very large gifts get taper relief on the excess over the nil rate band)

Spending it, is the best way to avoid the tax.

She needs to establish her nil rate band it can be upto £650k.

SeniorSam

You don't say if your mother is widowed or not, but if so and if your father left his estate to her, then you may have two nil rate band allowances before tax - £650,000.

Gifting can reduce that within the limits of individual gifting. It is the estate that pays the tax after death, not the beneficiaries. It is the executors responsibility to deal with that before the estate can be distributed.

Can you clarify the position of our father for us?

Sam

quietriot

masters02 wrote: »

Simple situation: my mother intends to avoid inheritance tax on her estate that is over £600k.

Since she'll be dead, why does she want to avoid IHT? I think it is actually you who doesn't want any tax coming out of your precious inheritance.

xylophone

https://www.gov.uk/inheritance-tax/overview

PennyForThem_2

quietriot wrote: »

Since she'll be dead, why does she want to avoid IHT? I think it is actually you who doesn't want any tax coming out of your precious inheritance.

Lol _ I am equivalent of OP's mother. Of course I want to avoid IHT - why would I not?


I want to make sure my kids inherit as much as possible, and not the state.

quietriot

PennyForThem wrote: »

I want to make sure my kids inherit as much as possible, and not the state.

What's your opinion on state benefits?

Keep_pedalling

If the main driver is to prevent money going to the state, then the answer is simple change the will to leave anything over the threshold to charity. I am sure they would make better use of it than a child who has cleared off out of the country and is never coming back.

noh

masters02 wrote: »

Hi all,

Simple situation: my mother intends to avoid inheritance tax on her estate that is over £600k. We are aware that we can make annual gifts of £3000, but that won't suffice for us. So, how can she avoid paying inheritance tax on her estate?

I myself will be moving abroad and not returning to the UK. Would I have to pay inheritance tax on gifts from my mother (over £3000 p.a.) after she is deceased?

Any advice is much appreciated!

Easiest way is for her to spend the excess over the allowance.

POPPYOSCAR

quietriot wrote: »

Since she'll be dead, why does she want to avoid IHT? I think it is actually you who doesn't want any tax coming out of your precious inheritance.

Well I am not dead yet and I want to avoid IHT on my estate so will be doing everything I can to avoid it having to be paid.

wallbash

POPPYOSCAR wrote: »

Well I am not dead yet and I want to avoid IHT on my estate so will be doing everything I can to avoid it having to be paid.

Very sensible, those that are objecting, are not looking forward to an inheritance. So lets put down their remarks to jealousy.

Let them put their non existent inheritance to charity / state etc.
As you might gather I am in a similar position as your self and the OP.

Time to have a VERY serious talk with mum/dad.