As Benjamin Franklin said, the only things certain in life are death and taxes...
With the Nil Rate Band (NRB) currently frozen at £325,000 until 2020/21 and the Residence Nil Rate Band only available to individuals who meet the government's criteria, it is important that you consider what options are available to you to reduce the potential Inheritance Tax (IHT) bill on your death.
There are some simple ways of reducing your estate during your lifetime - the most fun would be to spend it! However, you may wish to help future generations or your spouse/partner but you do not necessarily need to wait until you die to do this.
Some simple tax free planning options may be available to you:
- Use of your annual exemption
- Use of specific exemptions for weddings
- Utilising the small gifts exemption of £250 per person per year
- Using your NRB every 7 years
- The use of a trust
- Regular gifts out of excess income
All of the above options are 100% legal and these lifetime gifts could help your friends and family now as well as mitigating your potential IHT bill.