A valuable inheritance tax exemption: gifts out of income
The Finance Act 2006 made the use of trusts to reduce Inheritance Tax (IHT) liability less attractive, so it is now sensible to think of other reliefs available under the IHT legislation.
If you are thinking of making lifetime gifts, there are a number of exemptions from IHT. The best known is an outright gift, after which you have to survive for seven years from the date the gift is made. If you survive for that period the gift will fall outside your estate for IHT purposes. There is a sliding scale relief under which the tax payable is reduced if you survive for more than three years.
Read and download our briefing note below to understand what you need to know about the Gifts out of Income.