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Apr. 28, 2015

5 Tips for Reducing Your Inheritance Tax Bill

The amount of inheritance tax claimed by HMRC has been steadily increasing over recent years and is set to continue to do so as property prices rise.

If you want to minimise your inheritance tax bill then it’s important that you remain well informed about inheritance tax rules and take advantage of any exemptions that you are eligible to. Here are five tips for keeping ahead of the game and reducing your inheritance tax bill.

Write a Will

This is the first and foremost action you should take to reduce your inheritance tax bill. If you die intestate it can lead to all sorts of inheritance tax liabilities that you could have otherwise avoided. Dying without a will could also mean that your estate is not passed onto the people that you would have liked to benefit from it.
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Plan and Prepare

Make sure that you are planning over a long period in order to reduce your inheritance tax bill rather than leaving things until the last minute. Investigate what options are open to you so that you can take full advantage of any tax relief options and exemptions that you may be eligible to.

Be generous with gifts

You can avoid paying inheritance tax on excess cash by gifting it to people, any gifts that are made seven years or more before your death will be exempt from inheritance tax. This exemption applies to gifts of up to £3,000 per person, per tax year. You may also give up to £250 a year to as many people as you like.

Use an Inheritance Tax savings trust

When you place your assets into an inheritance tax trust fund they are protected from inheritance tax. Once money is in the trust it is no longer counted as being part of your estate and so is not taxable.
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Avoid investing cash in ‘non-trading’ assets

Non-trading assets such as investment properties can jeopardise your inheritance tax relief. Make sure that you’re well informed about where is best to invest excess cash to minimise your inheritance tax bill.