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Inheritance Tax Could Cost You a Lot If You Don’t Know the Rules

Your Inheritance Tax

A person's possessions describe everything they own and everything that can be shared. If the total amount of property exceeds the state allowance, 40% of the surplus is required for domestic income after the funeral bills and unpaid money from the deceased have been paid. Some gifts are often referred to as lifetime expenses and are not excluded unless the property is under the zero tax limit. You can get the best expert advice on inheritance tax planning and trusts in London.

If lifetime transfers exceed the limit, they will be paid at a rate of twenty percent; if the person making the transfer dies within seven years of their transfer, the total amount will be subject to a further twenty percent inheritance tax.

inheritance taxes uk

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Avoid inheritance taxes through trusts and gifts

If the deceased gives gift money to the relationship, that amount, if settled seven years before his death, is not controlled by inheritance tax. This type of gift is sometimes used in tax planning and is marked as a potentially tax-free transfer.

Trust money can be used to evade inheritance taxes if, for example, there are minor children or grandchildren and the money is held in a trust in their name until they reach adulthood, this is a potentially tax-free transfer. 

In addition to planning a trust fund, a person can convert his assets into prize money that has not been regulated for 7 years and consists of:

  • Countless gifts of 250 for everyone
  • Wedding gifts up to 5,000 each for your children
  • 2500 wedding gifts for your grandchildren
  • Wedding gifts for up to 1000 additional people
  • More prizes up to 3000 per year
  • Gifts from charities, non-profit foundations, and political parties.

Families should research things like wills and trust funds with a family attorney who is familiar with all aspects of inheritance tax law and its loopholes.