Question

How can one avoid paying inheritance tax in the UK?

Answer 1

At a staggering rate of 40%, inheritance tax in the UK makes a lot of people apprehensive. After all, it’s no fun spending a lot of money on assets that were lovingly bequeathed to you. Luckily, not everyone who inherited something needs to pay an inheritance tax.

The threshold for Inheritance tax is £325,000, which means it is only charged on the part of the estate greater than that amount. In addition, inheritance tax won’t apply if you’re leaving everything above the threshold to a partner, spouse, charity, or a community sports club. If the estate is left to a child or grandchild, the threshold increases to £500,000.

Always consult an expert, no matter if you’re the one receiving an inheritance or you want to protect your beneficiaries. I highly recommend Goldsmith & Co. for having the leading chartered accountants in North London.

Answer 2

In the UK, you can reduce or avoid inheritance tax by using your £325,000 nil-rate band and any residence nil-rate band, gifting assets during your lifetime (provided you survive seven years after large gifts), leaving money to spouses, civil partners, or charities, placing assets in trusts, or investing in relief-qualifying business or agricultural assets, while regularly reviewing your estate planning with a solicitor or financial adviser to ensure exemptions are used correctly.