Considering a significant gift?

Industry News - 3rd September 2024

If you are considering offering a significant gift during your lifetime, it is important to be aware of the rules in relation to Inheritance Tax (IHT).

Most gifts made during a person’s life, including the gift of a home, are not subject to tax at the time of the gift. These lifetime transfers are known as ‘potentially exempt transfers’ or ‘PETs’.

These gifts or transfers will be exempt from IHT if the taxpayer survives for more than seven years after making the gift. If the donor passes away within three years of making the gift, then the IHT position is as if the gift was made on death and IHT will be due. A tapered relief is available if death occurs between three and seven years after the gift is made, meaning a lower amount of IHT is payable.

IHT may be chargeable if the person making the gift retains some ‘enjoyment’ of the gift made. For example, where a person gifts their home to their children and continues to live in the house rent-free. In this case HMRC will not accept that a true gift has been made and the ‘gift’ would remain subject to Inheritance Tax, even if the taxpayer passes away more than seven years after the transfer.

If you are currently considering making a significant gift, please contact us to find out how IHT may impact you.

Our Blog

Recent news about us and our industry.

Google Rating
5.0
Based on 42 reviews
js_loader