Estate Planning

Estate Planning with Dootsons

Wills and Trusts Services
Inheritance Tax

Inheritance Tax (IHT) is presently payable on any Estate exceeding £325,000 in value. Your Estate includes any assets you own at your death including your half share of any joint assets. Assets left to your spouse or civil partner on death are always free of tax unless your spouse has a foreign domicile. In April 2017 the government introduced an additional exemption: “The Residence Nil Rate Band”.

This exemption is available if you are leaving your home to direct descendants. The allowance is currently £150,000 per person and will increase as follows – In the tax year 2020/21 to £175,000 For subsequent years, the maximum additional exemption will increase in line with inflation. To mitigate any tax payable you may make the following gifts:

Lifetime Gifts

Exemptions from tax – the following gifts are exempt from IHT:

  1. Gifts made between spouses.
  2. Annual allowance of £3,000 per tax year. An unused allowance can be carried forward for one year only.
  3. Small gifts allowance of £250 per donee per tax year. The number of donees is unlimited, but cannot include recipients of the annual allowance.
  4. Normal expenditure out of income. You may give away any surplus income provided it does not affect your usual standard of living and there is some element of regularity in the payments.
  5. Gifts on marriage: to children £5,000 to grandchildren £2,500 to others £1,000.
  6. Gifts to charities.
Lifetime Gifts

If a gift does not qualify as an exempt gift (see above) it may be a Potentially Exempt Transfer (PET). This means that although there is no IHT immediately payable when the gift is made, the person making it has to survive the date of gift for a period of 7 years before it becomes exempt from IHT.

Examples of PETs are:

a direct gift to an individual(s) gifts into certain types of trust

Note: The reservation of benefit rule:

In order for a gift to be effective for IHT purposes you must not retain any Benefit in that gift e.g. if you give your property but still continue to live in it will still be treated as owing if for IHT purposes

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    Meet the team

    Rebecca Stringfellow - Head of department

    Rebecca joined Dootsons in 2014 as a Solicitor in the Newton le Willows branch office. She is a graduate of Manchester Metropolitan University and subsequently completed the Legal Practice Course Programme at the Manchester Law School. She was admitted as a Solicitor in 2007. Rebecca is also a Full Member of STEP – the Society of Trust and Estate Practitioners, and a Student Member of Solicitors for the Elderly. Rebecca became a Partner in May 2019.