There are certain gifts you can make which are not subject to this 7 year rule. Everyone has an “annual exemption” for inheritance tax of £3,000 each every tax year. That means you can give away £3,000 in total every tax year and it immediately falls out of your estate for inheritance tax purposes. If you die within 7 years, that gift will not be brought back into account. If you haven’t used your annual exemption one year, you can roll it forward for 1 tax year, so you can give away £6,000 the next year. You can only do this once, however.
All gifts to UK charity, registered housing associations, qualifying political parties, national museums and universities are also exempt form inheritance tax altogether, whether you give to them under your Will or during your lifetime.
If your children or grandchildren get married, you can give them or their new spouse a lump sum of £5,000 or £2,500 respectively, completely free of inheritance tax.
You can give any amount to your own spouse free of inheritance tax (provided you are both domiciled in England and Wales) although you should seek legal advice before doing so, as this could affect other tax planning possibilities.
There are other gifts which are exempt from inheritance tax – please telephone or call into one of our offices to arrange an appointment and we will be happy to discuss these further.