At the present time, should a person make a gift from their estate, they must survive the gift by 7 years for it to be exempt from Inheritance Tax. However, there has been an official review ordered by the Chancellor and as part of a radical shake up the 7 year rule could be cut to 5 years. This will only affect estates with a value exceeding £325,000 (or £650,000 with a transferable Nil Rate Band).
At the moment a person can gift up to £3,000 in any tax year. This is known as an ‘annual exemption’. Under the proposed changes, the annual exemption may be replaced by ‘a single person gift allowance’. At present, the allowance level is yet to be confirmed.
If you would like any advice on lifetime gifts and Inheritance Tax, please contact a member of our Probate team at any one of our offices.