Potentially, yes. Inheritance tax is due on gifts that you make during your lifetime. But there are a number of exemptions.
For example, there is no inheritance tax (IHT) due on lifetime gifts to your spouse or to charity. You also can make transfers to others of up to £3,000 or small gifts of up to £250 without IHT liability (although you cannot combine those two exemptions). You can also make certain gifts in consideration of marriage and pay for insurance policies that are written in trust without incurring IHT liability.
In addition, you can make gifts outside those exemptions, which are known as “potentially exempt transfers”.
A potentially exempt transfer (known as “PET” for short) will give rise to IHT liability if you die within seven years of the date you make the gift. The amount of IHT due is reduced, however, on a sliding scale during that seven year period – so if you die late in the seven year period, less IHT will be due than if you die early in the seven year period. This is known as “taper relief”. You can learn more about inheritance tax and taper relief on HM Revenue & Customs website.
Additional Information & Advice
Depending on your circumstances, however, it may be a good idea to speak with a solicitor who specialises in estate planning and tax law. You can find a solicitor in your area for free via solicitor matching services, which can also help you to understand the best course of action for your situation and whether you are even ready to hire a solicitor.
- Inheritance Tax: Government Hits Jackpot
- 7 Reasons You Should Write A Will
- UK Tax Relief For Married Couples & Civil Partners
- 5 Ways To Avoid Inheritance Tax
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