8 Ways to Legally Avoid This Unjust Tax
There are many reasons to avoid UK inheritance tax. Inheritance Tax is one of the most unjust of all taxes. After a lifetime of paying tax in a high-tax country like the UK, the government is first in line to grab another 40% when you die. There are a few relatively simple things you can do to avoid UK inheritance tax completely. It’s well worth planning early to avoid UK inheritance tax and ensure that none of your hard-earned savings end up going to the wasteful government.
1. Take advantage of the allowances for inheritance tax.
The threshold for inheritance tax is £325,000. No tax is payable on estates below this amount. There is an additional £175,000 allowance for your main residence if it is left to a direct descendant such as a child or grandchild. This gives an effective allowance of £500,000 before the 40% inheritance tax rate comes into effect. A married couple can split assets between them to stay under the limits and avoid UK inheritance tax.
2. Gifts and transfers between spouses and civil partners are free of inheritance tax
If you’re married or in a civil partnership, any transfers of assets between you and your partner are not subject to inheritance tax. A simple strategy to avoid UK inheritance tax is to distribute assets between partners to stay under the threshold of £500,000.
3.There is a £3,000 annual gift allowance
You have an annual allowance of £3,000 to give away to family members. You can carry this allowance forward for one year. So if you didn’t use the allowance in the last tax year, you can give away £6,000 in this tax year.
4. Lifetime gift allowance.
Cash you give away to cover the living expenses of family members is not subject to inheritance tax. If you are helping your family with their normal living expenses, this is not taxable.
5. Tax exemptions for business owners
If you are a sole trader or a partner, no inheritance tax will be payable if the assets pass to your heirs. Unlisted stock and qualified Alternative Investment Market shares can also be inherited tax-free. If you hold a controlling interest in a publicly-traded company, there’s a 50% tax exemption.
6. Exemptions for agricultural land
There’s a 100% exemption from inheritance tax on agricultural land and certain buildings. There’s also a 100% exemption for agricultural tenancies that started after 1995.
7. Put your assets into a trust or foundation.
Assets held in a trust or foundation are not classed as your estate and are therefore not subject to inheritance tax. This is one of the main ways that super-rich families preserve their wealth between generations.
8. Move to a country where there is no inheritance tax.
There are many countries where there is no inheritance tax at all. So if you want to avoid UK inheritance tax, you could live in countries like Australia, Portugal, Monaco, Hong Kong, or Thailand where there is no inheritance tax. You might even live a little longer, have a sunnier climate, and a healthier life!
This article barely scratches the surface of the many ways you can avoid UK inheritance tax. It is so easy to avoid this highly unfair tax that you would be mad not to take the necessary steps to avoid it. Surely no one wants to give the UK government any more money after paying a lifetime of high taxes.
We help high net worth clients legally minimise tax liabilities using a variety of structures including offshore companies and trusts. We offer holistic strategies to preserve your wealth including second passports and residences overseas. Our goal is to protect your assets from being seized by taxation or by lawsuits. We set up impenetrable structures to ensure your assets are protected no matter what. Click here to get in touch with us to find out how we can help you with your personalised strategy to protect your assets.