Inheritance Tax is charged on the assets you own on your death and on certain lifetime gifts. In broad terms if an individual has assets of over £325,000, or a married couple over £650,000, Inheritance Tax is payable at 40% on their wealth above this figure when they die.

·         Gifts made to your spouse;

·         Gifts made to charities;

·         Gifts made to political parties.

 

·         Gifts made as normal expenditure on a regular basis which come out of your surplus income;

·         Gifts made during one tax year of a total not exceeding £3,000;

·         Any number of individual gifts, worth up to £250, made during the year to different persons (this relief is in addition to the annual allowance of £3,000);

·         Gifts given on marriage. Parents can each give up to £5,000; grandparents may give £2,500, as may the bride or groom. Anyone else may give £1,000.

 

Other gifts which do not fall under the criteria listed above may be “potentially exempt transfers” (PETs). All gifts made to individuals may be PETs. PETs become exempt if you live for at least seven years after having made the gift. If you die during this seven year period, the PET becomes a chargeable transfer, and its recipient becomes liable to pay the tax charged on it.

Emma can be contacted on 0191 411 2468 or emma.glover@rowlandsaccountants.co.uk if you require further detailed information.