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United States Inheritance tax: How to make the most of all HMRC allowances in 2022
More and more people are being caught in the inheritance tax net as property prices rise but the threshold remains the same. Although inheritance tax can’t be avoided there are several ways to legally reduce the amount of tax to pay.
Hundreds of taxpayers are being caught out every year when it comes to inheritance tax with latest figures indicating that this adds up to around a quarter of a million pounds per person.
However, there are a number of ways in which homeowners can reduce the IHT bill on their estates and give money to family members without them being slapped with a huge bill from HM Revenue and Customs (HMRC).
Typically, Britons are exempt from paying inheritance tax if their estate is worth £325,000 or less
However, there are some exceptions to this threshold if people give to friends, family members or a spouse.
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How can I avoid paying inheritance tax in 2022?
- The value of one’s estate is below the £325,000 threshold.
- Leave everything above the £325,000 threshold to a spouse, civil partner, charity or a community amateur sports club.
- This allowance increases to £500,000 if Britons give their home or assets to their children or grandchildren.
Before giving cash to a family member, Britons should check whether they could carry a previous tax allowance over.
If Britons don’t use their allowance in one twelve month period they can carry it forward one tax year.
Gifts of £5,000 can also be made if someone is getting married.
A parent could gift their child up to £11,000 tax free in one year - a £5,000 gift made in consideration of marriage plus this year’s £3,000 annual exemption and last year’s £3,000 allowance if it hasn’t been used already.
