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Take care of your family

Paystream News

David McManus

Wednesday 21st Feb, 2018

The cornerstone of any effective Inheritance Tax (IHT) planning is your Will. It is important that your current will is up to date and in line with your future wishes.

You can gift up to £3,000 each tax year free of IHT, or £6,000 if there was no gift in the previous tax year. You are also allowed to make as many gifts of up to £250 each as you wish to other people as well as gifts on the occasion of a marriage. Regular gifts out of income can also be made as long as your capital or standard of living is not reduced, though advice should be taken before doing this.

If you prefer not to make gifts now you may prefer to fund any potential IHT liabilities by the use of assurance policies.

If you have permanently separated from your spouse during this tax year, you may want to consider dealing with transferring assets between you before 5 April 2018. This is because assets can pass between separated spouses without Capital Gains Tax in the year of permanent separation. Transfers taking place after this deadline may attract Capital Gains Tax liabilities.

You could also "straddle" a disposal across tax year end to make use of two annual exemptions. Alternatively, where you are planning on selling an asset, you may simply wish to consider delaying the disposal until after the end of the tax year. This may be helpful from a cash flow perspective as any tax arising will not be due until 31 January 2020.

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