Your chance to pick our ‘Business Brain’

OVER the next few weeks you will see an advert for ‘Business Brain’. In addition to our regular column, we will be answering your questions and advising you on making sure your plans are tax efficient.

To get things started, I have an example below:

Q: Can you give me a couple of examples that I can use to avoid my children paying substantial inheritance tax (IHT) on my estate?

A: There are several ways of mitigating IHT, but this is a complex area of financial planning, requiring ongoing and regular review due to ever-changing legislation in this area.

However, everyone is entitled to certain IHT exemptions which, if not utilised, are lost.

The most commonly known exemption is the £3,000 ‘gift’ per tax year, an entitlement that if not used in one tax year can be carried forward for one year only. So use it, or lose it!

A lesser known – but incredibly useful – exemption is ‘gifting’ as part of your normal expenditure from your income.

There is no financial limit on this exemption; however, you must ensure that the gifts form a regular pattern and are from your income and not capital.

In addition, your standard of living must not be impacted as a result of making the gifts.

This allowance can be used to help with education costs, to make contributions to pensions on behalf of grandchildren (up to a maximum of £3,600 a year) or to fund a ‘whole of life’ policy, which will pay any IHT liability on your death.

These options allow you to potentially mitigate or lower any IHT liability without relinquishing control of your capital.

This is just one of the questions we are commonly asked at Rennie Welch, but do get in touch with us by email on if you have any queries about IHT or other tax matters.