With ever-increasing property prices, more and more people’s assets are
now worth more than the inheritance tax threshold of £285,000,
which has never been increased in proportion to the recent property
boom. With a rate of 40% inheritance tax on any assets above the
£285,000 threshold in the estate, this can really put a dent in
what your heirs receive from your estate.

Inheritance tax is levied upon a person’s death. Once all of their
assets have been totaled up, anything over the threshold will have to
be paid by the executors of their will.

It’s becoming increasingly difficult to avoid inheritance tax, but
there are some strategies that you can put in place to help minimize
its impact. Inheritance tax is an extremely complicated subject,
though, so you should never attempt to make any plans yourself without
good professional advice, otherwise you may end up making your tax
situation worse.

Make a will

First, make a will. This in itself won’t help you to avoid inheritance
tax, but it will make your intentions clear so that any inheritance tax
planning you have put in place will come into effect.

Transfers between spouses

If you’re married or in a civil partnership, both of you should attempt
to use your full threshold separately.

Husbands and wives or civil partners can transfer assets (such as
property) to each other without incurring inheritance tax. However,
this will increase the value of the surviving partner’s estate, which
will be subject to tax when they die. If this brings it above the
threshold, inheritance tax will then be due. Another possibility is to
bequeath your estate to someone other than your spouse, for example
your children. However, this has its own complications and is not
always appropriate.

Gifts

If you want to give something away during your lifetime but still keep
using it, the Inland Revenue may still consider it part of your estate
for tax purposes when you die. Such gifts are regulated under the
‘inheritance gift with reservation’ rules. For example, if you sold
your house to your

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