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Careful and affordable gifting can help reduce the impact of inheritance tax levied on your estate when you pass away.
Gifts that enjoy an exemption from inheritance tax can include gifts to your spouse or civil partner
provided you're both UK domiciled
gifts made to registered charities,
some national institutions such as universities or museums,
and recognised political parties.
You can also make a number of other gifts to individuals within certain limits
for example, you can make any number of gifts of up to £250 per recipient.
or wedding gifts of up to £5,000 for a child,
up to £2,500 for a grandchild, or up to £1,000 for anyone else.
In addition, you can make gifts worth up to £3,000 in each tax year
although this type of gift cannot be used in conjunction with the £250 gift exemption, to the same person.
Gifts made during your lifetime that do not fall into any of the exempt categories
may be liable for inheritance tax, and are commonly referred to as potentially exempt transfers, or PETs for short.
If you survive for 7 years or more after making a gift,
it will not normally be counted towards your estate for the purposes of inheritance tax.
However, if you do pass away within 7 years of making a gift,
that does not fall into an exempt category,
the gift will be counted towards your estate
for the purpose of calculating how much inheritance tax you owe, if your estate totals over the inheritance tax threshold.
Inheritance tax can be complicated, but planning ahead can reduce its potential impact
and could help you pass more of your estate onto your loved ones.
For more information, and tailored advice, speak to a financial advisor