If your estate is worth more than £325,000 (or £650,000 for married couples and civil partners) it’s likely that some of it will be liable for inheritance tax (IHT). This tax bill could amount to 40% of everything over the threshold – a huge chunk of what you might be hoping to pass on to your loved ones. You may be wondering if you can reduce the tax burden on your beneficiaries, and how to go about it.
The most obvious way to reduce your inheritance tax bill is to make your estate smaller by giving money away while you’re still alive. Any gifts you make more than seven years before you die won’t be eligible for IHT up to a certain amount. But if you die less than seven years after making a gift, the law says that the recipient could have to pay tax on it. And if you give something away but still benefit from it – such as your home – HMRC may treat it as part of your estate and will levy tax on it in the normal way.
If you want to reduce your IHT bill without falling foul of the law, our legal experts can help. We’ll explain how you can make sure your loved ones receive the maximum possible benefit from your estate and what your options are. And we’ll help you understand the rules around gifts, and the common pitfalls and misconceptions around IHT liability.
All advice contained within this section relates to England and Wales only.