Parents and grandparents are unclear about Inheritance Tax rules, according to new research from over 55s retirement specialist Key Retirement.
A survey it commissioned reveals 47% of parents and grandparents do not understand the tax rules around gifting and almost three quarters (73%) admit they find the rules complicated. At the same time, 38% are not aware their estate might be liable for Inheritance Tax on gifts to family members.
So what are the rules governing Inheritance Tax, which have recently changed following the introduction of the Residence Nil Rate Band?
Gifts and Inheritance Tax
There’s usually no Inheritance Tax to pay on small gifts you make out of your normal income, such as Christmas or birthday presents. These are known as ‘exempted gifts’.
There’s also no Inheritance Tax to pay on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.
You can give away £3,000 worth of gifts each tax year – your annual exemption – and any unused annual exemption can be carried forward to the next year, but only for one year.
Each tax year, you can also give away:
Currently, the Inheritance Tax threshold is £325,000 per spouse, plus the new Residence Nil Rate Band (RNRB).
Inheritance Tax is just one area of taxation which Regulatory Accounting can advise you on. For assistance, please get in touch with the team.