How to escape Inheritance tax on lifetime gifts

UK inheritance tax works on the principle that you pay IHT even though the lifetime gift to a trust is  valued less than £325k, if you have made other gifts to certain trusts in the last 7 years.


Lesson: if you often make gifts to individuals and to trusts, make sure that the gifts to trusts chronologically come before the gifts to individuals in each tax year. This will reduce any inheritance tax on the latest gift.

If you make more than one gifts to trusts in the same tax year and on some gifts the trustees pay the tax whilst on others you do, to minimise your own inheritance tax bill, make sure that the gift you pay the tax is made earlier than the gift the trustees pay the tax.