When it comes to Inheritance Tax (IHT), most people know about the 7-year rule for gifts. But few know about a lesser-known exemption that can take assets immediately out of your estate – no waiting, no taper relief.
What It Is
If you can show that regular gifts are made from surplus income (not capital), and that they don’t affect your standard of living, they’re exempt from IHT right away.
Why It’s Powerful
- There’s no limit to the amount.
- It doesn’t use your £3,000 annual gift allowance.
- It can be part of a structured family wealth transfer plan.
The Conditions
- Gifts must be regular (e.g., monthly, quarterly, annually).
- They must come from income, not capital.
- They must not reduce your own standard of living.
- You must keep records to prove it.
Case Study
By gifting £50,000 a year to each of three children from rental income, over 10 years, £1.5m was moved out of the estate – saving over £600,000 in potential IHT.
The Hartey Wealth Management Edge
We design surplus-income gifting plans backed by cash-flow modelling, so you can give generously without risking your own financial security.
If you want to move wealth to family tax-efficiently, this is one of the smartest tools you can use – let’s map it out.
