Inheritance Tax UK: These rules are vital for couples to note on their IHT bill | Personal Finance | Finance

Inheritance tax is currently set at 40 percent by HM Revenue & Customs (HMRC). It is payable on the value of estates in Britain which fall above the current £325,000 threshold. Even for those who have an estate which falls below this figure, IHT is still important to bear in mind.

This is because these will still need to be reported to HMRC in order to receive the right valuation.

There are, however, important rules to bear in mind for those who are married or in a civil partnership.

These rules are likely to have a bearing on how much couples will be required to pay.

As many will want to leave as much of their estate to their loved ones as possible, keeping these rules in mind is important.

READ MORE: Inheritance Tax UK: The key rule Britons may want to check

This could serve as a valuable boost for a surviving partner, helping their threshold climb to up to £1million.

But couples should also consider the gifts they hand out across their lifetime.

Gifts are considered as anything with value, including money, property and possessions. 

The seven-year rule dictates that gifts which are given within seven years of a person’s death are subject to IHT, and the amount of tax can vary depending on when the gift was given. 

This is called taper relief, and the government has provided a guide to how much people could be charged.

For gifts given less than three years before death 40 percent tax is charged, with this amount reducing to 32 percent between three to four years.

Gifts given four to five years before death are taxed at 24 percent, reducing to 16 percent five to six years before death.

Finally, gifts given six to seven years before death are taxed at eight percent, and those given over seven years before death are free of tax.

However, while these rules appear to be strict, there is a small victory couples can take.

Any gifts given between spouses and civil partners, to one another, will not be subject to Inheritance Tax.

People can give their partners as much as they like during their lifetime, as long as they are resident in the UK permanently. 

Other gifts are also exempted, such as small gifts of up to £250, and Christmas or birthday presents.

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