Don’t leave it too late: Lawyer warns as IHT on gifts skyrockets

DON’T LEAVE IT TOO LATE’: LAWYER WARNS AS IHT ON GIFTS SKYROCKETS

With new figures revealing that the amount of inheritance tax (IHT) paid on gifts has seen a 153% increase since 2011, lawyers are warning people to address their financial planning now to avoid being caught out.

Data from HM Revenue and Customs shows that in the 2020/21 tax year IHT paid on gifts reached a massive £256m, while 1,300 estates were forced to pay the tax, a 120% increase since 2011.

The figures have been reported by national financial advice firm Continuum which accessed the data via a Freedom of Information request.

Paul Davies, a partner in the private capital team at national law firm Clarke Willmott LLP, says there are ways to mitigate the inheritance tax but people should be mindful.

He said: “Estates are held liable to pay IHT on gifts made within the seven years preceding the individual’s death. Clients need to ensure they don’t leave it too late to make gifts if they want to mitigate the inheritance tax they will pay when they die, in view of this rule.

“It seems to me the large increase reported is largely due to allowances not keeping pace with inflation – they’ve been frozen for many years.

“This makes it even more vitally important for people to get their affairs in order and think early about who they would like to see inherit what. Taking early legal advice means you can rest assured that your affairs are in order and your loved ones won’t be hit with an unexpected legal bill.”

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and it is this year celebrating its 135^th anniversary.

For Wills, inheritance tax planning or advice in relation to lifetime gifts, contact Clarke Willmott on 0800 652 8025 or visit Trusts & Inheritance Tax Planning Solicitors – Clarke Willmott