The Easter weekend will be a welcome break for some and, with the delights of Spring, comes the feeling of freshness and new beginnings. One such beginning is the new tax year, which commences on 6th April 2021.
Before this arrives, why not have a think about your succession planning and Inheritance Tax position? It is always handy to consider making use of your available Inheritance Tax-free allowances and, particularly, those tied to the tax year.
These can include the ‘annual exemption’ for Inheritance Tax, which allows each individual to make lifetime gifts of up to £3,000 per tax year and for these to escape potential Inheritance Tax from the outset. It is possible for any unused portion of the annual exemption to be carried forward, but to the next tax year only, so you may wish to make use of this while you can.
Another possible exemption is that for ‘small gifts’. This allows gifts to an individual per tax year of up to a total of £250 to be exempt for Inheritance Tax. The small gifts exemption cannot be added to the annual exemption, i.e. to give one individual £3,250, but it is possible for you to give these small gifts of up to £250 to as many individuals as you like!
With the news that Inheritance Tax allowances are frozen until 2026, there will be no rise for the ‘standard’ Inheritance Tax or the relatively new Residence Allowance. This means that it is all-important to consider and fully utilise these exemptions as they stand.
To ensure that you are making best use of your Inheritance Tax-free allowances or for advice more generally on your Inheritance Tax position, please contact our expert team.
For any help or advice on anything covered here, or for further support with inheritance tax and later life planning, please contact our dedicated Later Life Planning team.