According to new reports, Prime Minister Rishi Sunak may be planning a major change of inheritance tax regulations, including the potential of outright elimination.
Families may face a hefty inheritance tax (IHT) charge in the hundreds of pounds as a result of a common mistake, a finance expert says.
According to Rowan Harding, a financial adviser at Path Financial, consumers in the United Kingdom may be penalised when gifting cash or assets such as a house because they are unaware of rigorous inheritance tax requirements.
At the moment, Britons have the right to gift as much money or as much of their own property to someone as they like.
They should, however, be conscious of the tax ramifications.
Giving up to £3,000 to a loved one or friend in any one year is tax-free, but any more and it will be added to the worth of their estate, making them responsible to the taxman.
Britons may have thought about giving up their house to their son, daughter, or someone close to them now so they don’t have the tax burden when they pass away.
Individuals are cautioned to “be aware” that if they die within seven years, they may still be left with a tax bill.
Furthermore, if they choose to continue living in the property or benefit in some manner from selling it, they may still be required to pay the taxman.
“People should be aware of the tax implications when they decide to give away sums of money or an asset, such as a property,” Mr Rowan added.
“The person receiving the gifts could be liable for tax if you pass away up to seven years later or you continue to benefit from the gift in some way.
“Getting the right advice on these topics will be crucial so you can avoid a hefty tax bill and make sure more of your money stays with your friends and loved ones.
“Whether it’s cash you want to give, a house or something else, make sure you’re in-the-know on what you might owe HMRC so you don’t or your loved ones don’t find themselves out of pocket.”