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| All of us want
to do the best we possibly can for our loved ones, which is why it
makes sense to take steps to ensure that they enjoy the full benefit
of anything which we are able to pass on to them. Many people find that by making a few relatively possible alterations to financial arrangements it is possible to save a significant sum in taxation and effectively leave a much greater legacy to the people who matter most. Planning to minimise the liability to IHT is a team effort involving you and your professional adviser. To enable long-term objectives to be set, it is necessary to make decisions about your finances and your family. Currently only 6% of estates have a liability to IHT. This is forecast to increase substantially in the next five years. When should I plan for IHT? Now! IHT is currently payable where a person's wealth is in excess of £300,000 for 2007/08. Thus, if you own your own house and have some savings, life assurance policies, or business assets, your estate could be liable. Why now? Most gifts made during your lifetime will be entirely exempt from IHT if you live for seven years after making the gift. How does IHT work? When you die, IHT will be charged on your personal wealth, together with all or a proportion of your lifetime gifts made in the preceding seven years. The full rate of tax is 40%, but this is reduced on a sliding scale for gifts made between three and seven years before your death.
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