argent's guide

Since 2006, many types of trust previously used to minimise the impact of inheritance tax have no longer been appropriate for many families. The changes introduced then did however highlight the importance of this issue to just about everyone. This “tax on savings” as it has been called takes 40% of your estate above the threshold (set at £300,000 for 2007/8) other than the money left to a surviving spouse or civil partner.

That means that on an estate of £950,000 the taxman will take £260,000, while each of three beneficiaries receives just £230,000. So without careful planning, the Chancellor of the Exchequer could become your biggest beneficiary.

Yet there are ways of minimising inheritance tax that do not fall foul of the changes. Some of these include:

• Making use of Exempt gifts, including £3,000 a year per donor, gifts on marriage, gifts out of income and the small gifts allowance of £250 per recipient;
  
• Making use of Potentially Exempt Transfers (gifts made more than seven years before death); and
  
• Using the full allowance up to the then current threshold on the first death of husband and wife (or civil partner).

We can advise you on strategies to help you minimise the impact of inheritance tax on your estate and ensure that your family receives as much as possible of the money you have built up during your lifetime.

THE FINANCIAL SERVICES AUTHORITY DOES NOT REGULATE TAXATION ADVICE