Gifting calculator
Calculate the impact gifts could have on an estate’s value, and the long-term effects of gifting.
How it works
Gifting is a popular way to reduce inheritance tax liability.
This calculator is designed to help you understand some of the key areas of gifting as a starting point to providing specific advice for your client.
To get started, you’ll need a few details about your client’s estate and the amount they intend to gift. If your client intends to leave their estate to their spouse, it may be useful to complete the calculator from the spouse’s perspective.
Things to bear in mind
Inheritance tax can be a complicated topic. This calculator has been prepared in good faith and is based on our understanding and interpretation of the current law, which may change in the future.
Estate breakdown
Current estate arrangements
Potential savings
Inheritance tax liabilities
Next steps
Assessing your situation
The value of the gift the client intends to make
?Value of the rest of the estate
House
?Other property
Savings
Investments
Other
?Total estate value, including intended gift:
£ 0
Current estate arrangements
Has the client made any gifts in the past seven years?
Yes
No
-
Yes
When an estate is left wholly to the spouse, the unused nil rate band is added to the surviving spouse's own nil-rate band.
Therefore, this calculator works best if you take the combined estate of both spouses into account when completing the estate section and Gifting Log. If you haven’t done this already, please use the ‘back’ button and update.
This calculator assumes any gifts are made jointly by both spouses and calculates estimates on that basis.
Please note that if a gift is made by an individual the inheritance tax liability could be substantially different, even if the remaining estate is left to the spouse. -
No, unmarried/leaving it to others
-
No, widowed
Will they be leaving their estate to a spouse/civil partner?
Based on the figures you have entered, the client’s inheritance tax liability today is:
£ 0
Did their spouse or civil partner leave all of their estate to the client?
Yes
No
Did their spouse or civil partner use all of their nil-rate band? (I.e. did they leave more than £325,000 of assets to people other than the client?)
Yes
No
If no, how much did they leave unused?
Potential savings
For clients that are comfortable with the associated risks, a Business Property Relief (BPR)-qualifying investment could be an interesting alternative to gifting. Making gifts usually takes seven years to become completely free from inheritance tax. But an investment in a BPR-qualifying company can be passed down to beneficiaries free of inheritance tax after it has been held for just two years. Another benefit is that owning BPR-qualifying shares allows a client to plan for their estate while keeping their wealth in their own name.
The risks of investing in companies which qualify for BPR
Remember, BPR-qualifying investments put capital at risk, and investors may not get back the full amount they invest. Client-specific circumstances may result in different levels of inheritance tax being due and legislation may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the unlisted companies we invest in could fall or rise in value more than those listed on the main market of the London Stock Exchange, and may also be harder to sell.
See results by year
Use the dropdown to see how making this gift could save inheritance tax each year. Lifetime gifts typically become completely free from inheritance tax after seven years.
The intended gift could result in an inheritance tax saving of
£ 0
If a BPR-qualifying investment is made instead, this could result in an inheritance tax saving of
£ 0
This shows the inheritance tax that could be saved by the couple.
Inheritance tax liabilities
Use the slider to see the inheritance tax due on the estate at different points in time. The calculator shows how much inheritance tax could be payable (1) if the intended gift is made, (2) if the money was used to make a BPR-qualifying investment instead, or (3) if no estate planning is done at all. As the residence nil-rate band doesn’t apply to gifts it has not been included in this calculation.
The risks of investing in companies which qualify for BPR
Remember, BPR-qualifying investments put capital at risk, and investors may not get back the full amount they invest. Client-specific circumstances may result in different levels of inheritance tax being due and legislation may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the unlisted companies we invest in could fall or rise in value more than those listed on the main market of the London Stock Exchange, and may also be harder to sell.
If the gift is made, the estate will have an inheritance tax liability of
£ 0
If a BPR-qualifying investment is made instead, the inheritance tax liability will be
£ 0
Without any estate planning, the inheritance tax liability will be
£ 0
Next steps
Thank you for using our Gifting Calculator.
It looks like you have already completed our Gifting Log, we will therefore use the data supplied there to inform our calculations. Please click ‘accept’ if you are happy to proceed.
If you do not want to use your previous supplied data, please click here to clear your previous data and then re-enter the data now before you can continue.
It looks like you haven't already completed our Gifting Log, we will therefore need the data supplied there to inform our calculations. Please click here to complete this.
After you have completed the Gifting Calculator you can return to this point, and we will pick up the data of your last session.
Before Starting
Inheritance tax can be a complicated topic and these tools are intended to help you understand some of the key areas. They have been prepared in good faith and are based on our understanding of the law and our interpretation of it. But we do not provide tax advice. So, while we have tried to make inheritance tax simple, this calculator is not intended as a proxy for taking professional advice – advice that will help you understand how much tax may be due on any gifts you make or on your estate.
We always recommend that, prior to undertaking any tax planning, you seek the advice of a qualified professional adviser. He or she can take your personal circumstances into account and give up to date advice based on the rules at the time.
The investments that we manage are high risk and the value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Tax treatment depends on individual circumstances and may change in the future. Tax reliefs depend on the portfolio companies maintaining their qualifying status. The shares of the smaller companies we invest in could fall or rise in value more than shares listed on the main market of the London Stock Exchange. They may also be harder to sell. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: November 2016
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