Inheritance Tax Hacks for Savvy Grandparents
As a grandparent, you want to leave a lasting legacy for your loved ones. But did you know that you can save your family up to £3,000 in inheritance tax by gifting them part of their inheritance early? Martin Lewis, the Money Saving Expert, recently shared some valuable advice on how to make the most of this opportunity.
Grandparents can save their family up to £3,000 in inheritance tax by gifting them part of their inheritance early.
According to Lewis, grandparents can give their grandchildren up to £3,000 each year as a tax-free gift. But what if they want to give more? Lewis suggests that they can use their surplus income to make additional gifts, which are also exempt from inheritance tax.
“Providing you make regular gifts from your surplus income which do not affect your standard of living, those gifts are immediately free from inheritance tax.” - Rebecca Benneyworth, tax consultant
But how do you determine what constitutes surplus income? Benneyworth explains that you need to subtract all your expenses, including taxes, from your income to find out how much you have left over. This amount can then be used to make tax-free gifts.
Regular gifts from surplus income can be a great way to reduce inheritance tax.
It’s not just about the money, though. The key is to establish a regular pattern of gifting to demonstrate your intention to make these gifts a part of your normal expenditure. This way, even if you pass away before making all the gifts, your executors can still claim the exemption.
So, if you’re a grandparent looking to save your family some money and make a lasting impact, consider taking advantage of these inheritance tax hacks. With a little planning and foresight, you can make a big difference in the lives of your loved ones.
Plan ahead and make the most of your inheritance tax exemptions.
