A simple way to avoid inheritance tax (IHT) is to donate gifts to registered charities, according to Standard Life Assurance.
Estate planning specialist at the firm Julie Hutchison told the Scotsman that there is a 100 per cent exemption for both lifetime gifts – and those left in a will – made to registered charitable organisations, adding that cash is not the only kind of donation that can be contributed.
"Gifts of shares can also qualify under the so-called Share Aid rules, as can certain gifts of land under the Land Aid rules. There are also income tax and capital gains tax benefits to making donations to charity," she said.
The publication states that families were taxed £1.5 billion in avoidable IHT payments in 2006 – a 19 per cent increase from 2005.
IHT is payable at 40 per cent on the estate of a deceased person that exceeds £300,000. In his last Budget as chancellor of the exchequer, Gordon Brown stated that the threshold would be raised to £350,000 by 2010.