More than half of people making large gifts of money or assets are unaware of inheritance tax rules (IHT) that might apply to them. Research of 2,090 people conducted on behalf of HMRC found that only 45% of those who had recently made a gift knew about the rules at the time they made it.
Knowledge of inheritance tax rules was found to be relatively low, and even among those who were aware of them, 18% said the rules had influenced their decision to make a gift.
Inheritance tax is applied at 40% on the value of an estate over £325,000, although this threshold can change under certain conditions. Certain types of gifts, including those made within seven years of the person’s death, may be considered a part of the estate and are taxed as such.
There are a number of exemptions to this, depending on the value and type of gift, and when you made it. Around 13% of people surveyed were identified as ‘gifters’, having given a single gift of £1,000 or more, or multiple gifts of £250 or more that totalled at least £3,000, in the two years.
Afford Bond Partner, Paul Edwards said: “Those most likely to be affected by inheritance tax – especially business owners – are also more likely to give gifts of this size, with 51% of over-60s with substantial wealth doing so.”
If you would like advice on IHT planning, please email Paul.Edwards@affordbond.com – or use the Contact Us form on our website. Cheshire accountants Afford Bond have offices in Nantwich and Wilmslow.