It has been advised by leading Wealth Management and Wills Solicitor service based in the UK that anyone who intends to donate their money to their family as a ‘gift’ should make certain that they ensure that they explicitly express this to avoid any hefty inheritance tax charges. In case, the family is charged with an inheritance tax, you need to know what could be the several different methods on avoiding inheritance tax in the UK.
Present, there are no particular methods or guidelines for reporting outright gifts at the point that they are made, which means that the obligation has always been focused on the executors of the estate to make the HM Revenue and Customs aware of any gifts during the deceased’s lifetime and particularly those that have been made in the last seven years.
Nevertheless, changes to these rules and regulations have meant that the HM Revenue and Customs will no longer only focus on the estates that are in excess of the Nil Rate Band at the time of death. Now the HM Revenue and Customs will look further into the estates where it appears that no tax charges take place in an attempt to minimize the ‘tax take’.
How To Avoid Inheritance Tax In The UK?
Below are some advices on how best to give a gift to avoid inheritance tax in the UK:
- If any gifts are in the form of Cheque, cash or even a Chattel, a letter should also be included along with the Chattel that indicates that the gift givers intend to give this item as a gift. If the value is known then it should also be included in the letter along with the signatures and date by the giver.
- If the gift has been intended as a loan, then the promissory note should be dated and signed by the recipient.
- Avoid using the ‘Side letters’. A Side Letter is basically a letter that explicitly state that if for whatever reasons the relationship ends between the donor and the receiver then the donor can claim their gift back. To ensure that the gift stays free of the inheritance tax, then it must be without this regulation and any such letters that fetter the gift to this then the gift because it is IHT liable.
It is not be noted that the entire Inheritance tax process is not as complex as it need be and if the right advice is given it can be made a lot more clearer for all the related parties. Click here for more rops advice