IHT Planning: Use Your Exemptions Before It’s Too Late

With tax currently charged at 40% on estates worth more than £300,000, the recent rise in property values has brought even those with relatively modest homes into the inheritance tax (IHT) net. Last year, the Government earned over £3.5bn from IHT, an increase of almost 50% in just five years.

So how can families reduce their liability?

Certain gifts will fall out of an estate immediately, while others will remain chargeable for up to seven years. The main exemptions are summarised in Figure 1.

Life insurance policies should always be held in trust so that death benefits fall outside the estate and can be accessed without probate.