Brits issued HMRC warning over gifting cash to youngsters as finances may land them with large invoice
Brits have been put on alert to tread ‘carefully’ with a potential Inheritance Tax shake-up looming in the Autumn Budget from the Labour-led government. The Chancellor is reportedly mulling over stretching the existing “seven-year” rule – where gifts can be handed down tax-free – to a full decade.
Yet, experts and Treasury insiders are flagging that this could mean a bureaucratic nightmare, potentially reducing the cash flow into the Treasury coffers. One expert voiced doubts about any real revenue boost, saying it’s “unlikely to raise additional revenues”.
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Financial guru Carla Morris gave a stark warning: “Inheritance tax is paid by a few but feared by all.”
Meanwhile, Maxwell Marlow, research chief at the Adam Smith Institute, chimed in: “Extending the time allowance from seven years to 10 is unlikely to raise additional revenues, as life expectancy amongst higher-income households continues to grow.”
He added, “Gift-givers will likely just grant gifts three years earlier than intended, thus nullifying the change.”, reports Birmingham Live.
Currently, gifts made over seven years before one kicks the bucket dodge the Inheritance Tax net, but if you die within that period, your kin could be given a tax bill ranging from 8% to a whopping 40%, all hinging on the timing of the gift.
The rule might be cut to just 10 years tomorrow, however. Money guru Carla, from Money with Carla, said: “A carefully considered lifetime gifting plan can ensure a client gets to see the positive difference they can make to their families lives and financial security, but it needs careful advice and managing, which could include life cover, trusts and definitely needs good record keeping.”
She also stressed the importance of planning, highlighting: “To ensure you can enjoy a long and comfortable retirement as well as help your family it is crucial to plan ahead and take advice.”
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