Ways to beat inheritance tax
Posted: 04 Sep 2006 13:09:25 GMT
Following the recent political wrangles over inheritance tax (IHT), an advisory group has published its top ways to minimise the tax before loopholes are closed.
Vantis, a tax advisory firm, has drawn up a list of nine methods for maximising the amount of estate that doesn't qualify for the 40 per cent levy that can be passed onto relatives.
This list includes remembering the nil rate band, which refers to houses below £285,000 being exempt from IHT.
Potentially exempt transfers (Pets) - which are gifts to individuals of 'disabled' trusts - can, if kept for over seven years with no benefit to the donor, fall out of the IHT qualifying bracket.
In addition a £3,000 gift per year can be given by an estate and not qualify for the inheritance levy. Therefore over a 20-year period, a husband and wife could gift up to £120,000 of their combined estates.
This would potentially give an IHT saving of £48,000.
Peter Legg, head of IHT planning matters at Vantis, stated: "Readers are no doubt aware of the radical changes to the IHT treatment of trusts which were first announced in the March budget statement."
"We are strongly recommending that high net worth individuals and intermediaries ensure that they are taking the basic steps to mitigate the potential IHT liability."
Small gifts of up £250 pounds can also be given to individuals over a period and marriage gifts are often forgotten as a way of minimising IHT on estates.