The way to beat inheritance tax (but what's the catch?)
This is Money Podcast
This is Money
4.1 • 650 Ratings
🗓️ 6 September 2024
⏱️ 57 minutes
🧾️ Download transcript
Summary
Some believe it's immoral double taxation and should be axed altogether, others say crank it up - and somewhere in the middle there are many people who feel that taking 40 per cent is just too much.
But it's also a tax that even those with an expensive home and plenty of savings can generally avoid if they choose, by spending more and giving more away in their lifetime.
The problem is that they need to survive seven years or they may get caught by some very outdated gifting allowances.
Yet, there is a little-known loophole that allows people to give away considerably more without worrying about the seven-year rule.
On this podcast, Georgie Frost, Lee Boyce, Simon Lambert look at inheritance tax and the surplus income rule.
They discuss this trick to beat death duties and the catches it comes with and all the other rules surrounding IHT.
Also on this week's show: noisy heat pumps, the British Isa meets its maker and our failure to support the high streets that we moan about dying.
Transcript
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| 0:00.0 | Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Lee Boyce. And coming up, we have a trilogy of reader questions for the first half of this week's pod, from the little known way to beat inheritance tax to bungalow wars and heat pumps making a racket. |
| 0:22.2 | Simon and Lee answer them all. Also today, the fun police scrap the British Issa, |
| 0:26.8 | and our Lee bemoans the death of the High Street. But are we all to blame? |
| 0:32.5 | Don't forget this episode with all the latest breaking money news just go to this ismoney.com.uk. |
| 0:55.8 | Or download the app. where it matters. Our website and app make trading cost-effective and flexible, but we're more than just an online investment service. We're here for you, regardless of your financial needs, |
| 1:01.2 | or if your life takes an unexpected term. Your finances, your way. Take control today with Charles |
| 1:08.7 | Stanley Direct. Sign up now. |
| 1:11.0 | Investment involves risk. |
| 1:13.2 | But first, I imagine ahead of Labor's first budget. This is money and getting a fair few questions related to inheritance tax. |
| 1:19.6 | Well, we've picked one from a reader here, where it's actually a couple wanting to know how to give away surplus income. |
| 1:27.2 | But what they want to know are the rules around it. |
| 1:31.0 | Simon Lee, Simon, as I said, it's a little known quirk, I suppose, of the inheritance tax system. |
| 1:37.7 | Just explain the story and I suppose the wider principle we're discussing here. |
| 1:42.5 | So before we get onto this niche element of inheritance tax, |
| 1:46.6 | we should talk about inheritance tax itself, which is something that's quite niche alone, |
| 1:53.1 | because actually most people don't pay inheritance tax. Only a very small minority of estates pay it. |
| 1:58.7 | The number is rising rapidly because the thresholds have remained |
| 2:01.2 | frozen whilst people's wealth has been going up, but it's still the case that most people |
| 2:04.8 | don't pay it. It is, however, Britain's most hated tax. And that's because people just really |
| 2:10.4 | don't like the idea of it. It sounds quite unfair and 40% is quite a large amount to take off people. |
| 2:17.1 | So, to go back to inheritance tax, |
| 2:19.5 | how does it work? Everyone has £325,000, which is their nil rate band that they can give |
... |
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