Potentially silly question about inheritance tax

[small2018]

I know the threshold to give away money to avoid inheritance tax is £3,000 a year but how would the tax man (or woman!) know if I give more?

Well, they wouldn't if you were paying for someone else's groceries each week, or for the annual holiday, or even if you were leaving envelopes of used notes lying around every now and then, but if you were transferring money from one bank account to another, then that is traceable.

Thanks 😏

Your executors have to declare it, so part of their job will be to review your finances for prior years to look for any large transfers etc.

To make their job easier, it's good practice for people to leave a note of such transfers along with their wills and other important documents.

You can give regular payments completely free of inheritance tax with no upper limit as long as they come from your income with no detrimental affect on your lifestyle.

And gifts to individuals will never be subject to IHT if you survive 7 years.