Some common misconceptions:
- 7 years’ survival is not always decisive. The period can be 14 years in some cases
- Taper relief reduces the value of the gift if the donor survives at least 3 years. Incorrect
- The recipient never has to pay tax. Incorrect
- Apart from the 7 years survival strategy, the only other tax effective gifts are those within the annual exemption, currently £3,000 – plus a little extra for weddings. Incorrect
- You can save inheritance tax by gifting your house to your children. Incorrect.
And the list goes on.
A detailed analysis would need a long article – perhaps a future project. But for the present here are the lessons.
If you are thinking of gifting assets to save inheritance tax take expert professional advice. If you are an executor dealing with the gifts of a deceased, you must make a careful examination of his or her paperwork to establish what gifts have been made and report them, if necessary, in the HMRC account. HMRC are, in our experience, investigating more cases involving lifetime gifts.
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