Inheritance tax on lifetime gifts, could the system be simplified?
A recent review of the Inheritance Tax (IHT) system was made by the Office of Tax Simplification (OTS), particularly focusing on chargeable lifetime gifts.
IHT applies primarily on death however also takes into account gifts the individual made in the last 7 years of their life. Taper relief may also be available if the person dies within those 7 years.
The OTS has suggested that the 7 year period is shortened to 5 years, and the tapered rate of IHT, which many find works in a counter-intuitive way, is completely abolished. This would mean that any gifts made more than 5 years before death are exempt, and lift a huge administrative burden from Executors dealing with the Estate.
Kathryn Cearns, OBE, OTS Chairman said “Although only a small number of people pay Inheritance Tax each year, a far greater number worry about it. The OTS’s packages of recommendations would go some way to achieving the goal of making the tax easier to understand and simpler to comply with.”
IHT should not be something that keeps you awake at night. At Gepp Solicitors our friendly and experienced team can assist with lifetime planning to reduce the potential IHT payable on death, and can help with the administration after death, giving you and your loved ones peace of mind.
If you would like more information about how we can help, please contact the Private Client team on 01245 228127 or send an email to firstname.lastname@example.org.