5 Ways To Minimise IHT

The Financial Times has an article which suggests 5 ways to minimise inheritance tax, given the recent tightening of the rules of taxation of trusts, and the effect it has had on IHT avoidance.

The 5 ways to minimise IHT are:

  1. Annual exemptions on giftsPotentially exempt transfers (PETs) allow individuals to gift money away and escape IHT. Gifts to spouses are IHT-free and other IHT exemptions include giving an annual amount of £3,000 to family members and small gifts of up to £250 per person a year.
  2. Nil-rate band trusts – Anyone can make a gift of an amount below the nil rate band for IHT into a trust every seven years and avoid paying IHT on that amount.
  3. Put Aim shares into a trust – Some accountants are now advising their clients to set up trusts using shares listed on the Alternative Investment Market (Aim). If done correctly, this will allow them to bypass the 20 per cent tax set-up charge on these trusts. The Aim shares can then be sold and the proceeds moved into less volatile assets such as cash.
  4. Agricultural assets – Agricultural land and assets can qualify for Agricultural Property Relief (APR) and therefore will not attract IHT.
  5. Corporate ownership of family assets – A corporate structure can be established to hold and transfer a family’s wealth to different generations through share ownership. The usual IHT rules may apply, but as these assets are less liquid, they can be passed to younger generations with less risk they will be frittered away.

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