Increase the amount that can pass to your family free of inheritance tax
What to consider before the end of the tax year?
In the approach to the end of the tax year, it is important to take advantage of allowances available to you before they are lost. Here are a couple of suggestions to bear in mind before 5 April:-
- Have you used your annual gift allowance of £3,000 from this year and from the previous tax year? You are able to claim last year’s unused allowance this year but if you do not do so before 5 April, the allowance will be lost.
- You can make as many small gifts to different people of up to £250 per tax year, so long as you have not used other exemptions on the same person.
- Have you used your annual Capital Gains Tax allowance? The current allowance is £11,300 per person.
- The Residence Nil Rate Band (RNRB) was introduced in April 2017 where your estate an benefit from an additional Inheritance Tax allowance where you leave your main residence to your direct descendants. Have you reviewed your wills to ensure they are structured appropriately to allow your executors to claim the RNRB?
- Have you got any surplus income that you are planning to convert into capital i.e. savings before the end of the tax year? If so, you are able to give the surplus income away without needing to survive the usual seven years with a gift (where that gift is not covered by an exemption).
These are a few ideas about what to consider before the end of the tax year. If you would like any more advice about IHT planning, please contact a member of our Private Client team.