SHIPLEYS TAX – Tax Bites

A RECENT study on Inheritance Tax paid suggests that many hundreds of taxpayers are being caught out by avoidable Inheritance Tax (IHT). The reports states that millions in unnecessary IHT have been paid through gifts gone wrong.

The study found that the most common issue involves parents giving the family home to their children but continuing to live there thereby making the property a gift with reservation. Such assets are caught by the Gift With Reservation Of Benefit rules and are treated as remaining part of the donor’s estate for IHT purposes.

For Inheritance tax purposes, a gift that is not fully given away because the person making the gift (the donor) keeps retains some benefit for himself will attract an anti avoidance tax charge.

However, it is quite possible to easily avoid this tax trap through some careful planning. Many people are unaware of this and are being unnecessarily caught out each year when passing assets along to the next generation. Unfortunately, this can lead to beneficiaries of the donor facing hefty tax bills.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.