09: IHT planning

The earlier IHT planning starts, the more likely it is to reduce the eventual tax bill. Many IHT planning strategies involve making gifts. Before you do so, you should ensure that you have enough income and capital for your own needs for the rest of your life.

Some other issues to consider are:

Making an up-to-date, tax-efficient will (see the section Making a will and our PDF guide Intestacy rules).
Giving away assets that you will not need.
Making use of annual exemptions.
Using your deceased spouse's/civil partner's nil rate band, if available.
Paying into a pension plan. Having a comfortable retirement means that you may be able to give away some investments, and pension death benefits are also generally IHT-free.
Equity release can reduce IHT and boost income in retirement.
Consider establishing a lump- sum IHT plan that allows you to make a gift into a trust, while still retaining an income.
Capital gains tax may be payable if you gift an asset that has a gain.
Do not forget about the possible impact of other taxes. You may have to pay capital gains tax (see the section Capital gains tax) if you give away an asset that you bought for much less than its present value.

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The FCA does not regulate taxation and trust advice. Tax rules are subject to change.

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IHT

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Inheritance tax - key features (243 kB)

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