Ferguson Bricknell Solicitors Inheritance Tax If you are worth more than £325,000 when you die your family may have to pay Inheritance Tax on your estate. Most homeowners in Oxfordshire have an Inheritance Tax problem because of the value of their houses. No Inheritance Tax is payable on anything you leave to your husband or wife, civil partner or to charity. Money or property left to anybody else, including your children or a partner to whom you are not married or in a civil partnership, is taxed at 40% on the value over £325,000. Trusts Some newspaper columns give the impression that all you need to do save inheritance tax is to set up a trust. A trust is a very useful tool for tax planning but, by itself, does not save any tax. It has to be used as part of an overall tax saving scheme. Double exemption for married couples and civil partners Since 2007 married couples can double-up the tax free amount which they can leave to their family. If the first spouse or civil partner has died leaving all his or her estate to the other, then when the survivor dies on or after 9 October 2007 the family get the benefit of a double nil-rate band. At 2011/12 rates, this means that on the second death £650,000 will be exempt from tax. And it does not matter if first spouse died before October 2007, the relief can still be doubled up. Exemptions and Lifetime Gifts You can give away £3,000 in any tax year (6th April - 5th April) without incurring any Inheritance Tax liability. If you did not use your annual exemption in the previous tax year, you can carry it forward for one year only. Husband and wife (and civil partners) have an annual exemption each. You can give £5,000 free of Inheritance Tax as a wedding present to each of your children when they get married (or enter into a civil partnership). If you give away money or property worth more than the annual exemption, the value of that gift will drop out of your estate for Inheritance Tax purposes if you live seven years from the date of the gift. If you die within seven years, the value of the gift has to be added back to your estate and is taxed. Advice For advice on how you can reduce your inheritance tax bill, please contact Chris Wallworth at our City Centre office.