Following on from last week, here are our next financial advent calendar tips, this week focusing on inheritance!
15th – Inheritance Tax (IHT) Nil Rate Band
The IHT nil rate band is currently £325,000 per person and can be inherited by the surviving spouse of a married couple. Any assets within the deceased’s estate over this value may be subject to tax at 40%.
16th – IHT Nil Rate Band – Gifting to Charity
If you are in excess of your nil rate band, it may be worth considering gifting to charity. Gifts to charity are not considered for IHT and if gifts to charity exceed 10% of your taxable Estate, the tax rate reduces from 40% to 36%.
17th – Main Residence Nil Rate Band
If you are planning to leave your home to your children when you die, you may now qualify for the Main Residence Nil Rate Band. This will add up to a further £150,000 each, increasing up to £175,000 from 6 April 2020.
18th – Lump Sum Gifting Allowances
Certain gifts are removed from your Estate immediately for IHT; £3,000 can be given each year and a smaller gift allowance of £250 can be given to any number of people.
19th – Gifts out of income
Gifts which are generated out of surplus income can also be exempt for IHT, but strict records need to be kept for this to be accepted.
20th – Alternative Investment Market (AIM)
AIM is a submarket of the London Stock Exchange enabling smaller, more volatile companies to float with a more flexible regulatory system. Because of their high risk nature, many of these stocks qualify for Business Property Relief and as such are exempt from IHT if held for two years. AIM stock can also be held within ISAs
21st – Enterprise Investment Scheme (EIS’s)
EIS investments comprise a series of UK tax reliefs designed to encourage investment in UK start-up firms, which are generally highly illiquid. The benefits of holding such an investment include 30% upfront income tax relief, Capital Gains Tax deferral and no CGT at all to pay on gains generated by the investment.
If this hasn’t got you into the festive spirit, I don’t know what will! If you have seen something you feel the need to discuss further, or this has whet your festive financial appetite, please do call in to discuss this further with one of our financial advisers at an initial meeting, provided at our cost – Merry Christmas!
