Inheritance tax is a tax on the value of everything you gift or leave behind when you die. Not everyone is required to pay inheritance tax. You can leave any amount to your spouse or civil partner. But if the amount you leave to others is valued above £325,000, the excess is taxed at 40% when you die. This is known as the 'nil-rate band'.
There’s also an additional inheritance tax allowance of £175,000 available. This is called the ‘residence nil-rate band’ and it can be applied to the main family home. There are other rules that apply to whether or not this allowance can be claimed.
With rising house prices and frozen allowances, very many people have an IHT issue to address. So, understandably, some families want to plan for inheritance tax. Let’s look at a few options here.
Gifting
One route available to individuals worried about leaving behind an inheritance tax liability is to gift assets away during their lifetime. This can be an attractive option if you want to see loved ones benefit from your wealth whilst you are alive. Gifting is a straightforward concept in principle, but the rules around making a gift can be rather complex.
