Home Personal Finance Families caught in £650m inheritance tax trap

Families caught in £650m inheritance tax trap

by TodayDigitNews@gmail.com
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The family has lost around £650m in inheritance tax over the last three years after breaking complex gift rules.

A Freedom of Information Request filed by The Telegraph reveals that families paid £244m in IHT for lifetime gifts in 2019-20, the latest year for which data are available Did.

Gifts that fall outside of allowances such as the £3,000 annual exemption are called ‘potentially exempt transfers’ (PET) and are exempt from the 40% death tax only after seven years. If you die within seven years, the tax may be levied in stages. The fee is 40 percent for him for the first three years of her life and drops to 8 percent for him for gifts made six to seven years before her death.

Taxes on such gifts are increasing year by year as tax revenues soar. In 2017-18 he lost £197m, in 2018-19 he increased to £201m ​​and in 2019-20 he lost £244m Increased.

Andy Butcher, of private bank Raymond James, said more people are being arrested because the current seven years is “too long”.

“The rules are easy to misunderstand. Clients are often reluctant to give more than the £3,000 annual exemption out of fear of making a gift that could expose them to IHT liability. “The data can give a lot more. The data show the importance of giving money early in life,” he added.

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