Yet grasping the basics of inheritance tax<\/a> can be financially savvy, particularly with some changes potentially introduced in the Autumn budget.<\/a><\/p>\n Reme Holland, a financial planning partner at accountancy firm Albert Goodman, notes the subject is consistently under scrutiny. <\/p>\n “Inheritance tax<\/a> is one of those areas that is always under the spotlight, and it seems to be a popular point of discussion at the moment,” she explains. <\/p>\n While awaiting the October\/November budget announcements, Ms Holland advises caution. <\/p>\n “We\u2019ll see what happens in October, November time, but I would always say, don\u2019t make any rash decisions. Seek advice first before you do anything.”<\/p>\n Ms Holland explains inheritance tax, who may be exempt from paying inheritance tax, what you may have to pay tax on, and what changes Chancellor Rachel Reeves could make to the tax. <\/p>\n How does inheritance tax currently work?<\/p>\n open image in gallery<\/p>\n All you need to know about inheritance tax and how to prepare for potential changes to the rules (Alamy\/PA)<\/p>\n \u201cEvery individual has a nil rate band of \u00a3325,000, which means you can have assets<\/a> worth up to \u00a3325,000 and not be liable for any inheritance tax (IHT<\/a>),\u201d explains Holland. <\/p>\n It\u2019s only on assets<\/a> that exceed this that you have to pay inheritance tax, which, as standard, is 40 per cent over the threshold.<\/p>\n Are there any exemptions?<\/p>\n open image in gallery<\/p>\n Being married or in a civil partnership can mean one partner can leave everything to the other, and no inheritance tax would be due<\/p>\n Yes, particularly if you\u2019re married or in a civil partnership. \u201cA spousal exemption means that a husband and wife [for instance] could leave everything to each other, and no inheritance tax would be due,\u201d says Holland. <\/p>\n Get a free fractional share worth up to \u00a3100. Terms and conditions apply.<\/p>\n Go to website<\/a><\/p>\n ADVERTISEMENT<\/p>\n Get a free fractional share worth up to \u00a3100. Terms and conditions apply.<\/p>\n Go to website<\/a><\/p>\n ADVERTISEMENT<\/p>\n \u201cIt would only be due on the second death, at which point both those allowances [of \u00a3325,000] could be combined.\u201d<\/p>\n Other exemptions include \u201cbusiness property relief and agricultural property relief if you\u2019re in farms and estates\u201d and for those leaving their estate to a charity or a community amateur sports club.<\/p>\n \u201cThere is another exemption called the main residence nil rate band, which is a further \u00a3175,000 each for married couples,\u201d adds Holland. \u201cOne of the conditions for having that extra allowance is the property has to be left to direct linear descendants, so children and grandchildren.\u201d<\/p>\n What about gifts?<\/p>\n open image in gallery<\/p>\n A gift can include jewellery (Getty Images\/iStockphoto)<\/p>\n Gifting is where things get more complicated. \u201cIn most circumstances, there is no inheritance tax due on the value of gifts given seven or more years before you die. <\/p>\n However, if you die within seven years of gifting money or another asset from your estate, then your loved ones may have to pay inheritance on the value of those gifts,\u201d explains Claire Exley, head of financial advice and guidance at Nutmeg. <\/p>\n \u201cHow much, will depend on when you gifted the asset and its value.\u201d<\/p>\n This is the inheritance tax relief taper. \u201cIf you die within three years of gifting money or assets, the IHT<\/a> rate will be 40 per cent, this rate decreases each year, eventually reaching 0 per cent if you survive for seven years,\u201d says Exley.<\/p>\n There are rules about how much you can gift too \u2013 around \u00a33,000 in a single tax year, with as many smaller gifts, up to \u00a3250 per person, also allowed. Birthday and Christmas presents are exempt.<\/p>\n Also, you can\u2019t request gifts back. \u201cIf you are making a gift, you need to give it absolutely and not retain any benefit,\u201d says Holland.<\/p>\n What two potential changes are being proposed?<\/p>\n open image in gallery<\/p>\n Chancellor Rachel Reeves is reportedly looking at altering inheritance tax laws (Oliver McVeigh\/PA)<\/p>\n \u201cOne of the things the government has mooted over the summer is putting a cap on how much can be gifted, and that cap could be somewhere between \u00a3100,000 and \u00a3200,000,\u201d says Holland.<\/p>\n![\"All](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/28135925-3c31ac8c-176b-4ed8-a9fa-21eb087536a3.jpg\")
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