Don’t leave it too late: IHT on gifts skyrockets
With new figures revealing that the amount of inheritance tax (IHT) paid on gifts has seen a 153% increase since 2011, Clarke Willmott’s lawyers are warning people to address their financial planning now to avoid being caught out.
Data from HM Revenue and Customs shows that in the 2020/21 tax year IHT paid on gifts reached a massive £256m, while 1,300 estates were forced to pay the tax, a 120% increase since 2011.
The figures have been reported by national financial advice firm Continuum which accessed the data via a Freedom of Information request.
Paul Davies, a partner in the private capital team here at Clarke Willmott, says there are ways to mitigate the inheritance tax but people should be mindful.
He said: “Estates are held liable to pay IHT on gifts made within the seven years preceding the individual’s death. Clients need to ensure they don’t leave it too late to make gifts if they want to mitigate the inheritance tax they will pay when they die, in view of this rule.
“It seems to me the large increase reported is largely due to allowances not keeping pace with inflation – they’ve been frozen for many years.
“This makes it even more vitally important for people to get their affairs in order and think early about who they would like to see inherit what. Taking early legal advice means you can rest assured that your affairs are in order and your loved ones won’t be hit with an unexpected legal bill.”
Speak to a specialist
For Wills, inheritance tax planning or advice in relation to lifetime gifts, contact our private capital team on 0800 652 8025 or request a consultation.
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