On your death any large gifts you made during the last 7 years of your life can be added back to your estate. Any gifts made within 3 years of death will be added back at their full value, this reduces by 20% of the value of the gift each year so that after 7 years the IHT value is nil.
This is to avoid you giving everything away on your deathbed and avoiding IHT. Generally small gifts under £250 and all gifts totalling under £3,000 per year don’t count and special gifts such as wedding presents, up to £5,000 to a child, £2,500 for a grand-child or £1,000 for anyone else don’t count either. Most other gifts will be added back to your estate on death and taxed.
At Douglas Hope Financial Management we specialise in estate tax planning and can help you reduce your estate’s liability and/or insure for the tax. Please call us on 01635 35533 for an informal conversation to see if we can help.