Inheritance Tax: A ‘simple but effective way to cover’ your bill | Personal Finance | Finance

“Regular gifts out of excess income can be made for IHT purposes, subject to specific affordability tests and qualifying criteria.”

People can also make lifetime gifts

People can make larger gifts of money. These are called potentially exempt transfers (PETs) and can be made at least seven years prior to death, however, this comes with “some conditions”, he explained.

He said: “One duly being that the assets must an outright gift (rather than, say, loaned or a gift with reservation) and another is that, should the donor die within the seven-year period, IHT becomes payable on a sliding scale.

“There’s an important caveat however! Determining whether such a gift is exempt only happens after your death, and is subjective.

“There’s a risk some gifts may be classed as being within your estate for IHT purposes if the taxman decides they did affect your lifestyle for example; therefore, if you are making habitual gifts it’s important to document your intentions and keep a record of this with your will.”