Families hit with big bills after believing gifts would not be taxed

Almost 2,000 people who thought they’d reduced the values of their estates by making gifts have seen an inheritance tax break stripped away.



Inheritance tax is charged at 40% on individual estates worth more than £325,000, and this can double for married couples.

Other allowances and exemptions are available to increase this threshold or taper the inheritance tax rate down from 40%.

One such relief is the seven-year rule, which sees people give away assets to reduce the value of their estates and ensure more wealth is passed on.

But a Freedom of Information request from the Telegraph found that since 2016, 1,830 gifts worth £624 million have been deemed taxable at 40%.

Most of these ‘gifts gone wrong’ related to property, 13% were cash gifts, while shares and securities accounted for 8%. The rest were classed as “other assets”.

If HMRC discovers an individual continues to benefit from an asset they’d given away, it’s known as a ‘gift with reservation of benefit’.

The best example is where someone continues to live in, and therefore benefit from, a property they’d gifted to a descendant.

When this happens and HMRC finds out, no tax break applies and the gift’s value forms part of the gift-giver’s estate.

There are other options for giving some of your property or money away to reduce the value of your estate.

Speak to us about inheritance tax. Email us at support@rollpay.co.uk or call on 01157588875