Let’s start with gifts, many of which are tax-exempt but some only if they are made in your lifetime. There are a fair number of
lifetime exemptions, include small gifts of up to £250 to any one person in any tax year; annual transfers of up to £3,000; and marriage gifts (£5,000 from a parent, half that from a grandparent or from the bride and
groom to each other, and £1,000 from anyone else). Exemptions available in life and on death are gifts
between husband and wife, provided the surviving spouse lives in the UK; and gifts to charities, charitable trusts or for ‘national’ purposes (which, among other beneficiaries, includes certain recognised political
parties). Then you need to consider making a will. If you haven’t done so, apply your mind now. Writing a
will not only ensures that our estate goes to the people we wish to benefit. Done properly, it also helps our nearest and dearest rather than the Inland Revenue; and it’s a caring gesture because it relieves them of
an administrative headache. It also makes sense to order our finances in a tax-efficient way, value and
transfer our assets sensibly, and get to grips with our pension death benefits. In fact, if married,
most people leave all their assets to their wife or husband, happy in the knowledge that there will be no IHT to pay on their estate. This certainly helps the spouse, but when they die, anything left in the estate
above the nil-rate band becomes subject to IHT and the children are landed with the bill. And remember this: tax on most assets must be paid before probate is applied for – which could mean the children having to
take out bank loans before they can benefit from the rosier future which you envisaged for them. The answer
– if you can afford it – is to consider making use of the nil-rate band when the first of the couple dies, rather than waiting until both have expired. To effect this it is important for a couple to split the
ownership of assets as equally as possible before either dies. Finally, a word about business assets, which
can qualify for total tax exemption. However, this does not apply to land and buildings let out on rental. The IHT rules on businesses are complex and expert advice is essential. Is it worth making a trust? They’ve been used to avoid tax for a very long time, but will they work for you? We’ll be looking at
property ownership, and trusts as a way of reducing IHT, in the next issue. In the meantime, have a happy
Christmas.
For further
information contact Vicky Newman, tel 0115 9886727, e-mail Vicky Newman.
We produce FREE monthly electronic newsletters including;
Private Individual,
Business and
Employment Law. You can register for
your copy online from our website
or e-mail
Carly Williams. | 
