Tax tip: Lifetime inheritance tax exemptions

There are plenty of small things clients can do in their lifetime which will not adversely affect their standard of living and could add up over a number of years to achieve a substantial inheritance tax saving.

We all have an annual inheritance tax exemption of £3 000. Gifts of up to £3 000 each tax year can therefore be made inheritance tax free. This means £6 000 a tax year for a married couple. Any unused exemption can be carried forward for one tax year. The gift can be made directly or through a trust arrangement. The annual exemption can exempt part of a larger gift.

Weddings provide another opportunity to make inheritance tax free gifts. The maximum ‘marriage exemption’ varies depending on the relationship between the donor and the donee – it is £5 000 from parent to child and £2 500 from grandparent to...