Invest Daily Pro
  • Economy
  • Investing
No Result
View All Result
  • Economy
  • Investing
No Result
View All Result
Invest Daily Pro
No Result
View All Result
Home Top News

Hundreds of families caught by seven-year inheritance tax rule as gifts trigger unexpected bills

by
August 27, 2024
in Top News
0
Hundreds of families caught by seven-year inheritance tax rule as gifts trigger unexpected bills
0
SHARES
9
VIEWS
Share on FacebookShare on Twitter

A rising number of families are being unexpectedly hit with inheritance tax (IHT) bills on gifts, as more people fall foul of the complex seven-year rule, recent figures reveal.

The rule stipulates that any assets transferred within seven years of a person’s death are considered part of their estate for tax purposes, subject to a 40% tax on amounts exceeding the £325,000 threshold.

Data obtained through a Freedom of Information request shows that in the 2020-21 tax year, 1,300 families were required to pay inheritance tax on gifts, more than doubling the 590 families affected in 2011-12. These figures reflect the growing trend of parents and grandparents giving away substantial amounts to help their children onto the property ladder or to reduce the size of their estate. However, with property prices and other assets soaring, many of these gifts are exceeding the tax-free allowance.

Collectively, these 1,300 families paid £256 million in death duties on large gifts, marking a significant increase from the £101 million paid in 2011-12. The spike in these tax bills, up by 119% in real terms, highlights the financial strain on families who may not have anticipated the need to pay such a high tax on gifts received years earlier.

Ian Dyall of Evelyn Partners, the wealth management firm that analysed the data, pointed out that many families might not have the liquid assets needed to cover these unexpected bills, especially if the gifts were invested in illiquid assets like property. He also noted that while some families are increasingly aware of the potential tax benefits of making large lifetime gifts, the strategy can backfire if the donor does not survive the seven-year period required to escape the tax liability.

Amidst this growing concern, there are rumours that Labour is considering raising inheritance tax to address a significant gap in public finances, prompting wealthy savers to take preemptive action. Lawyers have reported a surge in clients anxious about potential changes, with many opting to make substantial gifts now, before any new tax measures are introduced.

James Ward of Kingsley Napley highlighted that clients with assets between £2 million and £5 million are particularly worried about losing existing tax exemptions, such as the nil-rate band or the residence nil-rate band, and are seeking advice on how to mitigate the impact of potential tax increases.

A Treasury spokesperson acknowledged the challenges ahead, stating that difficult decisions on spending, welfare, and tax would be made in the upcoming Budget to address the £22 billion shortfall in the public finances. The possibility of further tax changes remains on the table as the government seeks to stabilise the economy.

ShareTweetPin

Related Posts

Have a taste of the perfect day in paradise with SULÀ Spirits
Top News

Have a taste of the perfect day in paradise with SULÀ Spirits

January 8, 2025
First months of 2025 likely rainy amid La Niña conditions, says PAGASA
Top News

First months of 2025 likely rainy amid La Niña conditions, says PAGASA

January 8, 2025
December inflation rises to 2.9%
Top News

December inflation rises to 2.9%

January 7, 2025
Outstanding debt hits fresh high of P16.09T
Top News

Outstanding debt hits fresh high of P16.09T

January 7, 2025
Outstanding debt hits fresh high of P16.09T
Top News

Outstanding debt hits fresh high of P16.09T

January 7, 2025
PHL end-December dollar reserves drop to $106.8B
Top News

PHL end-December dollar reserves drop to $106.8B

January 7, 2025
Next Post
Gogolook to strengthen TrustTech in PH

Gogolook to strengthen TrustTech in PH

Recommended

Wellness Expert Dr Zoe Williams Discusses the Benefits of Jigsaw Puzzles on TV

Wellness Expert Dr Zoe Williams Discusses the Benefits of Jigsaw Puzzles on TV

January 1, 2025
British Study Shows Call for Clearer, More Transparent and Standardized Food Labels

British Study Shows Call for Clearer, More Transparent and Standardized Food Labels

January 8, 2025
Dmitry Leus: The continued appeal of Cyprus for UK investors

Dmitry Leus: The continued appeal of Cyprus for UK investors

November 27, 2024
Luzon still experiencing unfavorable weather as Enteng exits PAR

Luzon still experiencing unfavorable weather as Enteng exits PAR

September 3, 2024
CREC may delay Isabela project acquisition until 2025

CREC may delay Isabela project acquisition until 2025

August 25, 2024
US posture in PHL’s sea dispute with China hinges on Trump’s Cabinet

US posture in PHL’s sea dispute with China hinges on Trump’s Cabinet

December 22, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 InvestDailyPro. All Rights Reserved.

    Disclaimer: InvestDailyPro.com, its managers, its employees, and assigns (collectively InvestDailyPro ) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
    The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    No Result
    View All Result
    • About us
    • Contact us
    • Home
    • Privacy Policy
    • Suspicious engagement
    • Terms & Conditions
    • Terms & Conditions
    • Thank you

    Copyright © 2024 investdailypro.com | All Rights Reserved