Inheritance Tax: How to Make the Most of All HMRC Allowances in 2022 | Personal Finances | Finance
More people are caught in the inheritance tax net as property prices rise, but the threshold remains the same. Although inheritance tax cannot be avoided, there are several ways to legally reduce the amount of tax payable.
Hundreds of taxpayers are caught off guard every year when it comes to inheritance taxes, with the latest figures showing it amounts to around a quarter of a million pounds per person.
However, there are a number of ways homeowners can lower the IHT bill on their estates and give family members money without them getting slapped by a huge bill from HM Revenue and Customs (HMRC).
Generally, Britons are exempt from inheritance tax if their estate is worth Â£ 325,000 or less
However, there are some exceptions to this threshold whether people donate to friends, family members, or a spouse.
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How to avoid paying inheritance tax in 2022?
- The value of his estate is below the threshold of Â£ 325,000.
- Leave anything over the Â£ 325,000 threshold to a spouse, civil partner, charity or community amateur athletic club.
- This allowance increases to Â£ 500,000 if the British donate their house or property to their children or grandchildren.
Before giving money to a family member, Brits should check if they can carry over a previous tax deduction.
If the British do not use their allowance in a twelve month period, they can carry it over to a tax year.
Donations of Â£ 5,000 can also be made if someone gets married.
A parent can give their child up to Â£ 11,000 tax-free in a year – a gift of Â£ 5,000 made in return for the marriage plus that year’s Â£ 3,000 annual exemption and allowance of Â£ 3,000 from last year if it hasn’t already been used.