Inheritance tax is charged at 40 percent on anything above the standard nil-rate band – which is £325,000 per individual.
If the residence nil rate band isn’t going to cover the estate being passed on, people may consider gifting before they die.
household and personal goods, for example, furniture, jewellery, or antiques
a house, land or buildings
stocks and shares listed on the London Stock Exchange
unlisted shares you held for less than two years before your death
Britons are urged to consider the idea of philanthropic endeavours which could help to reduce their IHT bill and bring other tax reliefs, too.
There is no IHT to pay for any gifts people give to charities or political parties.
Lucinda Frostick, Director of Remember A Charity told Express.co.uk: “While good money habits are often associated with making savings, when it comes to the desire to support good causes, giving a little away can make a big difference.
“Including a charity in your Will, for example, can be a wonderful way to invest in and leave a legacy of your own.
“Not only do donations like these enable your passions and values to live on through your favourite charities’ work – they can also offer generous tax incentives.”
In the UK, giving from a Will is becoming more widespread, with around 100 people leaving a gift in this way every day, research shows.
However, many people don’t know that charitable gifts can also reduce the amount of inheritance tax on their estate.
When someone leaves a donation to charity in their Will, that amount is free of tax, effectively increasing the tax-free allowance.
She continued: “What’s more, if you donate 10 percent or more of your estate, the inheritance tax rate is discounted from 40 percent to 36 percent, and this can make a considerable difference.
“For charities, this longer-term funding is crucial, strengthening their resilience in turbulent times and enabling them to deliver support wherever the need is greatest.
“No matter what cause you wish to support – whether that’s saving lives at sea, finding cures for diseases or funding much-loved community projects – gifts pledged now can help charities deliver vital services for future generations.”
There are some gifts that are exempt from inheritance tax. There’s no IHT to pay on gifts between spouses or civil partners.
People can give them as much as they like during their lifetime, as long as they:
It should be noted that everyone’s personal circumstances are different, so it’s important to speak to a solicitor or expert adviser when writing up a Will.
Speaking to a professional can help to ensure the Will best reflects one’s wishes, helping people take care of everything that matters to them – family, loved ones and good causes.