Older generation confused about Inheritance Tax
A new study suggests that Britain’s older generation does not fully understand the laws governing Inheritance Tax (IHT).
Worse still, the research – which was carried out by financial services firm Brewin Dolphin – suggests that many Britons are avoiding sharing their wealth with the wider family altogether, due to a fear that they will be caught out by IHT.
The survey found that most UK adults erroneously thought they were only able to gift £1,575 each year to their children tax-free.
In reality, individuals are able to pass down more than double this before their gift will attract IHT.
In fact, under IHT gifting rules, individuals are entitled to gift up to £3,000 a year tax-free – an amount which increases to £6,000 if no gift was made during the previous financial year. This indicates that many parents and grandparents are woefully underestimating IHT thresholds.
Brewin Dolphin’s survey found that 44 per cent of parents would give more money to their children if they thought they were able to do so without falling foul of IHT laws.
35 per cent of grandparents said the same, while 40 per cent of respondents said that they simply did not feel confident making financial gifts to their loved-ones at all under the current IHT regime.
In recent weeks, the Government has announced that a review of IHT will be carried out by the Office of Tax Simplification (OTS) with a view to ending some of the general confusion surrounding the tax.
In the meantime, Britons are urged to seek the advice of a specialist solicitor for help with the rules governing gifting, IHT allowances and tax-efficient Wills.