Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

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

by August 27, 2024
August 27, 2024
Hundreds of families caught by seven-year inheritance tax rule as gifts trigger unexpected bills

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.

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

0
FacebookTwitterGoogle +Pinterest
previous post
Thousands of Next workers secure landmark £30 million equal pay victory
next post
Iceland boss warns Labour of potential bankruptcy from ‘shock’ minimum wage rise

You may also like

How to Set Up an Ecommerce Merchant Account

March 1, 2024

Registrations live for the Evening Standard SME XPO...

January 19, 2023

Reddit communities go dark in protest at changes

June 14, 2023

Zendo Energy raises £1.75M to help data centres...

May 12, 2025

Half of UK business owners pledge to hire...

October 28, 2024

Meet the Company Disrupting the UK Wood Fuel...

April 26, 2023

3 Most Trusted Companies for Thesis and Dissertation...

February 26, 2024

How to Choose the Best ISP Proxy Provider:...

March 12, 2025

70% of mid-sized businesses on track to incorporate...

October 19, 2023

WeightWatchers pivots from diets to drugs in UK...

May 22, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

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

    Recent Posts

    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025
    • House witness flips script on Dem who ambushed him during hearing with unearthed tweet: ‘Iceberg is ahead’

      June 7, 2025
    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,568)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) 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.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved