Inheritance Tax: 10 ways to pay less tax to HMRC and save thousands

Inheritance tax: Financial advisor provides advice

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Some 15 years ago George Osborne said only millionaires would pay inheritance tax under a Conservative government. However, anyone who has a property worth more than £325,000 could face a bill from HM Revenue and Customs (HMRC).

Yet, although average property prices have risen by 53 percent in the last ten years, the threshold for paying IHT has stayed the same since 2009.

It was widely expected to be increased in the Spring Budget of 2021, but instead the Chancellor announced it would be frozen until 2026 at least.

Over the past 13 years, IHT has become a significant income stream for HMRC.

There are some exceptions to the threshold.

A residence nil-rate band was introduced in 2017 which allows a further £175,000, providing residential property is left to direct descendants.

However, the number of properties selling for more than £500,000 is increasing every year.

Although the threshold hasn’t risen, there are plenty of things Britons can do to pay less inheritance tax.

DON’T MISS
Woman discovered she owed E.ON £1,000 despite paying her monthly bill [WARNING]
Britons could wait longer for prescriptions after state pension change [UPDATE]
PIP: The key letter that claimants should look out for [ALERT]
‘Incredibly believable’ TV presenter issues scam warning [WARNING]

10 ways to pay less Inheritance tax to HMRC:

  • Talk to parents or grandparents about putting the property into trust
  • Make sure they know about Business Owner Exemptions
  • Donate a part of it (above the threshold) to charity
  • Gift up to £3,000 to family members and friends tax free
  • Give away assets seven years before they die? Encourage them to spend it well before they die
  • Make the most of wedding gift allowances (up to £5k)
  • Buy a funeral plan
  • Spend it
  • Be mindful of inheritance tax thresholds
  • Speak to an independent financial adviser.

People can save a huge amount of money by making the most of all the tax breaks available to them.

They can also reduce their bill by giving away £3,000 every year which will not be subject to IHT.

In addition, they can give £250 to any number of people each year as long as they haven’t used another exemption on the same person.

Meanwhile, parents can give £5,000 to each of their children as a wedding gift, grandparents can give £2,500 and anyone else £1,000.

Another way to pay less tax to HMRC is to make use of pensions and l ISA allowances.

Emma Keywood, senior product manager at AJ Bell, explained that pensions allow taxpayers to claim an additional 20 to 25 percent tax relief.

She said: “That means for a basic-rate taxpayer every £1 in your pension only costs you 80p and for a higher-rate taxpayer every £1 in your pension only costs you 60p.”

However, it may be useful to speak to an independent financial adviser to gain clarification.

Source: Read Full Article