10 July, 2019
An independent review by the Office of Tax Simplification (OTS) has concluded that the "seven year rule", a bedrock of UK inheritance tax (IHT) planning whereby assets given away during an individual's lifetime are exempt from IHT if the individual survives for at least seven years, should be cut to five years to simplify its administration.
The OTS have also recommended that the IHT free gift allowances be replaced with one allowance per person. At present, individuals can give away £3,000 a year free of IHT and unlimited gifts of up to £250 to other people. In addition, parents can give £5,000 to a child getting married and grandparents can give £2,500 IHT free. These allowances have not changed in over 30 years and the OTS found them to be confusing and poorly understood. A level for the allowance was not suggested, however, they pointed out that the £3,000 annual limit would be £11,900 if it had risen in line with inflation.
For more information contact Jane Burbidge in our Wills, Probate, Tax & Trusts department via email or phone on 01772 220156. Alternatively send any question through to Forbes Solicitors via our online Contact Form.