Britons given gifts warning – start planning or risk ‘escalating inheritance tax exposure’

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Inheritance tax: Financial advisor provides advice

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Simon Dawson, the Chief Commercial Officer for inheritance loan provider Legacy Release has issued a warning that Britons should “start planning now” when it comes to IHT gifting. Any Inheritance Tax which is due on gifts is usually paid by the estate. However, this is not the case if the deceased gives away more than £325,000 in gifts seven years before their death. While this is a popular way of preventing one’s estate from becoming a victim of the tax man after their death, experts are continuously calling on people to do their research before opting for this money saving measure.

Speaking exclusively to, Mr Dawson issued some sage advice to those looking to gift to their loved ones to avoid inheritance tax.

The financial expert said: “When you are gifting to loved ones, I think the best form of advice is to start thinking about that sooner rather than later.

“As there’s a seven year taper, the level of relief that you get from gifting diminishes significantly the later you leave it.

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“If you can start planning seven years in advance of you dying, although you may not have a crystal ball, this enables you to transfer a significant amount of wealth over to the loved ones in the next generation.

“This is exempt from IHT because within that seven years there’s an escalating level of Inheritance Tax exposure.”

Outside of passing assets down to loved ones, the inheritance guru emphasised how placing money into trusts can be equally as tricky when it comes to IHT.

Mr Dawson added: “The next thing is when you consider putting things into trusts, it’s always important to think about how that trust is structured.

“It’s also important how that trust is released to the intended individual and to to seek the correct financial advice as to what trust works best to that individual.

“You can not only put cash into trusts but you can also put things like life insurance and property into them as well.

“It all comes down to understanding the bigger picture and appreciating who will benefit from your allowances.

“Also it is vital to consider where those different allowances sit and therefore where the most appropriate places to gift are.

“Most importantly, it is about taking appropriate financial advice and pre-planning that at least seven years before you think you might experience your demise.”

Over the last 19 months, the COVID-19 pandemic has altered the way people interact with their finances with many looking to have their affairs in order during this period of uncertainty.

However, Mr Dawson highlighted how the pandemic has left many people vulnerable to inheritance tax unable to plan for their futures.

He explained: “Unfortunately with Covid, this has been accelerated. It has left people without proper planning and the harsh reality is we are only going to be able to do a certain amount of mitigation in life.

“In most cases, unfortunately, more and more people are going to pay more in IHT because of house prices going up and investment performances.

“The harsh reality is that inheritance tax is going to be due and it will become due within six months of the person passing.

“The more complex the estate and if the administrators have a lack of knowledge of it, it’s going to be a much longer process.”

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