A Guide To INHERITANCE TAX - St James's Place

Gifting
Gifting is an effective way of reducing your IHT bill, as
it removes assets from your estate before your death. In
order to qualify, gift making must be handled carefully
and without strings. For example, if you were to continue
to benefit from assets gifted away, they are likely to be
regarded as ‘gifts with reservation’ and as a result fall
back within your estate for the purposes of IHT.
Gifting falls into three main categories:
1. Exempt transfers, where the gift becomes exempt
from IHT on death. Examples might be transfers
between spouses, civil partnerships or gifts to charity,
or those which make use of gifting allowances.
2. Potentially exempt transfers, where exemption is
achieved if the gift is given seven years before death.
Gifts given less than seven years from death may
benefit from varying levels of relief.
3. Chargeable lifetime transfers are gifts which are
generally made into most types of trust which become
immediately subject to IHT, where the gift exceeds
the Nil Rate Band, but only at a rate of 20% when paid
by the Trustees or 25% when paid by the Settlor.
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PARTNERS IN MANAGING YOUR WEALTH