The normal expenditure out of income exemption, offering immediate relief from inheritance tax (IHT), remains a point of tax-planning that is often overlooked and underused. One of the challenges is that making regular gifts should never be just about tax planning, and the idea of wealth preservation should be considered first. To that end, the legislation also works with trusts and may offer greater flexibility, wealth preservation and wider tax-planning opportunities than gifting surplus income direct to the beneficiaries. Another complication comes from rumours of changes to tax rules, but more on that later.

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