Tips to reduce your IHT liability
Although the government is taking steps to crack down on tax avoidance schemes in a very public way, there are still methods of helping to reduce your IHT liability.
Transfer your nil rate band
Married couples and civil partners can transfer their nil rate band on death to the surviving person, if it is not used. With the current nil rate band standing at £325,000, this means that IHT will only become liable if their joint assets exceed £650,000.
Life assurance policies written in trust
By having your life assurance policy written in trust, you can ensure that the proceeds from the policy do not form part of your final, taxable estate but instead go directly to your beneficiaries.
Pensions on death
If you have a civil partner or spouse, monies which are received directly from a pension on death should be put into trust to ensure that they remain exempt from IHT, rather than directly to the surviving partner who would then be taxed on the proceeds.
There are a number of reliefs available which could help to reduce or minimise the IHT liability on your estate. Reduce the value of your estate whenever possible through increased spending and gifting up to £3000 per annum. Provided you live for at least another seven years after you have made a gift, then no IHT will fall due on that particular asset. Remember too that parents can make wedding gifts of up to £5000 per child and grandparents can give up to £2,500.