Inheritance tax (IHT) was introduced 30 years ago and broadly charges to tax certain lifetime gifts of capital and estates on death. Along with IHT came the concept of 'potentially exempt transfers' (PETs): make a lifetime gift of capital to an individual and, so long as you live for seven years from making the gift, there can be no possible IHT charge on it whatever the value of the gift.
The rules create uncertainty until the seven year period has elapsed but, at the same time, opportunity to pass significant capital value down the generations without an IHT charge. Of course this is to over simplify the position and potentially ignore a whole host of other factors, both tax and non-tax, that may be relevant. The rules surrounding inheritance tax and pre-owned assets is extremely complex so do seek professional advice before taking any action.
Read this fact sheet on Inheritance Tax Avoidance and Pre-Owned Assets to find out more about:-
- Gifting the family home
- Gift with reservation (GWR) rules
- HMRCs response to GWR
- Pre-Owned Assets (POA) rules and scope
- Arrangements for sharing the family home
- Equity release schemes
The rules surrounding inheritance tax and pre-owned assets are complex, and will depend on your personal circumstances and long term objectives, so do seek advice with your professional advisors before taking action. If you would like to discuss inheritance tax and your personal circumstances, please do get in touch with the team of tax specialists at DRG Chartered Accountants.
DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.