It is essential to be familiar with the basics of inheritance tax planning as well as the IHT thresholds. This knowledge will make a huge difference to your financial future, particularly after the death of a family member or divorce. You can also search online to get expert advice on inheritance tax planning and trusts in London.
What is Inheritance Tax?
IHT is an estate tax that must be paid upon the death of a person. It covers all assets, not just property and money. Gifts made by the deceased within the last seven years are subject to tax. IHT is usually paid by the executor or representative for the deceased.
Only estates exceeding the IHT threshold are eligible for inheritance tax. The 2011-12 IHT threshold for a single individual is 325,000. This threshold may be increased for married couples or civil partners if their second partner dies.
If your assets exceed the threshold, it may be possible to reduce or avoid the IHT altogether. You may be eligible for exemptions or reliefs that could include:
You can gift-exempt small gifts, up to 3,000 each year. Additionally, you can also give small gifts of up to 250.
Gifts for civil partnerships or weddings that are exempt from tax range in price from 1,000 to 5,000
Transfers exempted from tax may be exempted gifts made within seven years after the death of the deceased. They are exempted from IHT regardless of their value.