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Inheritance tax: Grandparents urged ‘reduce your bill’ as receipts rise | Personal Finance | Finance


The rising property prices are bringing even modest homes into the IHT net so careful planning could also be required to make sure one’s family isn’t left with a nasty surprise. IHT is paid at 40 percent on the worth of somebody’s estate, but it surely only applies above a threshold.

This covers their property, money, and possessions over £325,000 (the nil rate band), although the residence nil-rate band means it may well increase to £500,000. Married couples and civil partners can leave as much as double this IHT-free.

Jeannie Boyle, Director & Chartered Financial Planner at EQ Investors explained exclusively to Express.co.uk that it’s not possible to predict what the precise value of 1’s estate will probably be. Nevertheless, it’s value taking the time to grasp the general position that the family will probably be in.

She said: “Take into consideration your family members, planning ahead will provide you with peace of mind that they’ll receive what they need them to and likewise will reduce your bill and the impact of inheritance tax.”

Rebecca Durrant, head of personal clients at Crowe UK discussed how Britons can reduce their bill.

READ MORE: Martin Lewis explains how widow could discover what happened to husband’s state pension

Ms Durrant suggested using direct gifts because the as an efficient method to reduce costs.

She said: “A direct gift of money is the only type of gifting, there are few tax consequences to think about and with larger gifts the worth falls out of the donor’s estate after seven years.

“For smaller gifts there are also annual allowances available (currently £3,000), gifts on marriage (as much as £2,500 for grandparents) and considered one of the more useful reliefs is where regular gifts out if income may be made.

“These are great for planning where grandparents have excess income and may make regular payments to assist with school fees for instance.


Ms Durrant said: “Trusts offer an efficient vehicle for tax planning whilst protecting the money or assets for beneficiaries.

“Grandparents because the settlors may be trustees so retain control over how the assets are managed and spent and the trust can profit children, grandchildren and other relations as they see fit.

“As much as £325,000 per settlor (£650,000 for a pair) may be put into trust either as money or assets comparable to property or an equity portfolio with little tax consequences. The asset falls out of the settlor’s estate after seven years.

“That is an incredible way of helping their children with the price of a young family, as distributions may be made to assist with expenses because the family grows.”

Lastly she mentioned giving to charity as an option for cutting one’s IHT bill.

Giving to charity is something that has turn out to be necessary to her clients in recent times, whether that is small money gifts, gifts of larger assets and even creating family charitable foundations.

She explained that this is usually necessary to the family as an entire and may be factored in without an excessive amount of detriment to the broader estate.

She continued: “Additionally it is an incredible way for wealthy families to assist the subsequent generation understand the worth of cash.

“Finally, the important thing point with gifts is that to be effective for inheritance tax then all rights to the asset including income and capital must be given away.

“Subsequently, any large gifts must be done after careful planning to ensure that they will not be having a detrimental effect on retirement plans!”

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