So, what can you do to limit your inheritance tax?
- Ensure your life insurance policies and pension funds are in a trust. If they were not originally written in trust it is more cost efficient to add a trust now, as it means that inheritance tax will not be charged on any of these assets
- Instead of storing surplus income, make regular gifts to any beneficiaries. Gifts up to £3000 annually will be ignored and no inheritance tax will be due on them. If you fail to use the exemption amount for one year, you can carry it forward to the next tax year
- Smaller gifts, up to £250, can be made to as many people you like annually, and they will be excluded from inheritance tax
- Invest in assets that qualify for business property relief (BPR). These assets will be exempt from inheritance tax if they have been held two years prior to death
- Make gifts to charities and political parties, these are inheritance tax free