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Inheritance Tax Planning


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Give your money to your family, not the taxman

It's not just the rich and famous who have to think about Inheritance Tax. If you haven't made the right arrangements, your family may have to pay 40% tax on the value of your estate over £325,000 (the nil rate band) on your death.

Your estate consists of the value of your house, savings, investments, personal belongings and any life insurances not written in trust. When you consider that the average UK house price has increased by 8% since June 2014* you can easily have a large estate quite early on in your life.

*Source: Nationwide June 2016.

NFU Mutual Financial Advisers can help you review your Inheritance Tax planning needs. We have a partnership with AIG and we can help you choose the right protection cover to suit your needs.

This information is based on NFU Mutual's understanding of current legislation which is subject to change.


How can you avoid Inheritance Tax?

Anything you leave to your UK domiciled spouse is normally free of Inheritance Tax. But as soon as it passes to children or anyone else who is not exempt, it could be taxable.

Make the most of your Inheritance Tax exemptions

You can also take advantage of some of the Government exemptions to reduce the amount of Inheritance Tax your loved ones will pay:

  • Give away up to £3,000 each tax year

    This is called the Annual Exemption and you may also be able to utilise any unused allowance from the previous tax year.
  • Give small gifts of up to £250 to a number of different people

    Using your Small Gifts Exemption allowance, you can gift up to £250 to any number of people each tax year.
  • Give wedding gifts to your children

    The Marriage Gifts Exemption allows each parent to give wedding gifts of up to £5,000 to each of their children (grandparents can gift up to £2,500 to each grandchild). You can also gift as much as £1,000 as a wedding gift to anyone else.
  • Give to charities

    Almost all donations to charity are exempt. Where an individual leaves 10% of their net estate to charity, the rate of IHT chargeable can be reduced from 40% to 36%.

If you make regular gifts (including birthday and Christmas presents) out of your after-tax income (not your capital), that do not impact on your normal standard of living, you may be able to avoid Inheritance Tax.

Use a potentially exempt transfer

Making gifts during your lifetime can be a very tax-efficient way of passing on your wealth. If you make a gift to another individual, and it is not covered by any available exemption, it is known as a 'potentially exempt transfer'.

This transfer will be free of inheritance tax if you live for at least seven years after making it. If you die within seven years, the original gift will be included in your estate, but any growth in its value will not be included. If a 'potentially exempt transfer' becomes chargeable when you die within seven years of making it, depending on the size of the gift, taper relief may be available so that only part of the full tax has to be paid on the gift.

When you contact us we'll explain the advice services we offer and our charges. NFU Mutual Financial Advisers advise on NFU Mutual products and selected products from specialist providers.

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