Gifts and Legacies

What is the Inheritance Tax rate ?

NIL RATE BAND 2017/18 - £650,000 husband/wife or civil partners' combined allowance. All other assets taxed at 40% unless exemptions apply

All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable at the rate at death. This may then be reduced by taper relief.

New Residence Nil Rate Band applies to the main property from 06/04/2017 which will give an additional allowance of up to £100,000 per married couple or civil partners on their main property.

Charge on Gifts Within 7 Years of Death

Years before death 0 - 3 3 - 4 4 - 5 5 - 6 6 - 7
% of death charge 100% 80% 60% 40% 20%

Main Exemptions

  • Transfers between husband and wife and/or civil partners
  • The first £3000 of lifetime transfers in any tax year
  • Gifts of up to but not exceeding £250 p.a. To any number of persons
  • Gifts made out of income that form part of normal expenditure and do not reduce the standard of living
  • Gifts in consideration of marriage to bride and/or groom as follows: up to £5000 by a parent, £2500 by a grandparent or £1000 by any other person
  • Gifts to charities whether made during lifetime or on death

Do I have to list everything that I own in my estate ?

No, if you want specific objects, collections or even amounts of money to go to particular people, then yes you should list these. However, what you do not identify in your estate (everything else not listed - whatever it is) is dealt with through distribution of the Residue.

Do Gifts and Legacies have to be under a certain value ?

Not at all, A gift can be any value you like (e.g. £5,000 or a house etc.)

Can I set age limits when gifts can be received ?

Yes, this is what Trustees are for - to see that the gifts you leave are preserved as best as possible until they should be given at the time you have specified.

Can I gift to charities ?

Yes, but we need to know the full Name, address and Registered number of the charity. All gifts to charities are tax free - so they can be used to reduce any Inheritance Tax liability.

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