Your Comprehensive Guide to Inheritance Tax

Posted by Bluebond Tax Planning on January 19th, 2021

Do you find that inheritance taxes are unjust? Then you probably are not alone. Many individuals think on the same lines as you. Inheritance Tax UK 2020 is one of the taxes that are disliked by individuals the most. It is nothing new for people to dislike taxes. But this tax is one of the most disliked taxes. This is probably because one has to pay the taxes again on taxable money and property if it crosses the inheritance tax threshold.

So what is Inheritance Tax UK 2020? This is a tax that is applied to the property and assets of an individual after it crosses a certain threshold. This tax is not liked by most individuals as one has to pay the tax on taxable property. However, there are some ways in which you can beat this tax and save money from being paid as taxes.

Give gifts

To avoid paying Inheritance Tax UK 2020, you can give gifts. This is one of the best ways to save money from getting paid in the form of inheritance taxes. Every year, an individual can give £3,000 as gifts. This you can give to one person or you can split the amount between many people. This depends on your wish. There is also the provision to give £250 unlimited gifts to other people. For a wedding, you can give £1000 and you will not have to think about inheritance tax. One can also give £5000 to their kids and £2500 to their grand-children without thinking about inheritance taxes. The wedding gifts have to be made before the wedding. If the wedding is canceled, then this will be held under potentially exempt transfers. However, if you give the gifts and it crosses the threshold, then it may be taxable if you do not survive for seven years after giving the gifts. Or else this will be tax-free too.

Give money to charity

If you donate money to charity, then it will be exempted from Inheritance Tax UK 2020. The same also applies to any donations you make to political parties or even to sports clubs. If you leave ten percent of the taxable property to any of those groups in the will, the inheritance tax amount will fall from 40 percent to 36 percent. 

Leave property to the spouse

If you leave the assets or the property to your spouse, then you will not have to pay inheritance tax UK 2020 irrespective of any amount that you leave for them. In this way, you can leave a good amount for your family. When the spouse dies, the other partner will inherit the unused personal allowance. If the other partner has remarried, then one can use the unused personal allowances. They can add that and pass on and increase their whole personal allowance to a great extent.

These are some of how one can avoid paying Inheritance Tax UK 2020 and also save money in the process.