Gifts to friends and family, not the government

Inheritance tax (IHT) now affects more people in Britain and Northern Ireland due to booming property prices in recent years, with ten million properties currently liable for 40 per cent taxation on the homeowner's death.

Research by Scottish Widows has shown that one in four in line for the 'death duty' plan to give money away in the form of non-taxable gifts in order to beat the levy.

Forty-four per cent plan on giving away either a lifetime or annual gift to friends or family, with the average amount reaching £86,000.

Anne Young, tax expert at Scottish Widows, said: "Gifting is becoming an increasingly recognised way to avoid IHT, but remember few gifts are totally exempt. You can give £250 away to an unlimited number of people as well as up to £3,000 per tax year - these will all be exempt." There are other exemptions available.

It should be noted, however, that allowances can not be carried over for more than a year and it is vital to keep a record of gifts with your solicitor.

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