In this episode of Listen Without Prejudice, Nicholas Barlow, Head of the Private Client Team at Bishop & Sewell, is joined by Ben Williamson, Senior Associate, to shed light on one of the lesser-known — but highly effective — inheritance tax exemptions: normal expenditure out of income.
Nicholas and Ben break down how this exemption works, why it’s often overlooked, and how it can be a powerful way to pass wealth to your loved ones without falling foul of inheritance tax. They explore key criteria, practical examples, and common pitfalls — such as why the exemption only applies to surplus income (not capital) and the importance of keeping clear records to protect your executors later on.
The conversation also touches on strategic uses of this exemption, like funding life insurance policies or trusts to prepare for future tax liabilities, and why professional advice and solid documentation are critical for making this approach bulletproof.
If you’re keen to understand how to make regular gifts out of your surplus income, avoid the 40% tax hit on growing estates, or learn how these rules could be used to support your family in a tax-efficient way, this episode is for you.
