As more people are caught out by inheritance tax than ever before, due to increased wealth and rising house prices, Scottish Widows research reveals Brits are well aware they can't take it with them when they're gone, and are planning on giving away £103 billion to friends and family to avoid a huge tax bill on their death.
Four in 10 (41%), or 10 million households, now have an estate liable for a 40% tax bill on their death - up from a third (34%) last year. Of these people, four in 10 (43%) have taken, or plan to take, steps to mitigate this bill, with 44% or 1.2 million people planning on giving away either a lifetime gift, or an annual gift to friends and relatives. The average amount people are prepared to gift is £86,000.
Almost half (47%) would like their gift to be used to help their relatives get on the property ladder. One in five (20%) want their beneficiaries to use the gift for their own retirement, and the same (22%) would like recipients to save it for their own children. However, almost a quarter (22%) would like the benefactors to use it to pay off their debts.
Anne Young, tax expert at Scottish Widows comments: "IHT is a tax that affects almost half of the country and it is really important that people prepare for the possibility of leaving a huge tax bill on their death. Gifting is becoming an increasingly recognised way to avoid IHT, but remember few gifts are totally exempt. You can give £250 away to an unlimited number of people as well as up to £3,000 per tax year - these will all be exempt. In addition, if you live for seven years after making any other absolute gift, this will be exempt too. As a quarter of the recipients plan to use the money to pay off their own debts, it is obvious they could ill afford to pay additional inheritance tax on top."
