A leading Wealth Management and Wills Solicitor based in the south of England have recently issued a start warning that the HM Revenue and Customs department are very soon to implement a series of strict crackdowns on the current Inheritance Tax gifting loopholes.
They further advise anyone who intend to donate their money to their family as a "gift" should ensure that they make sure that they explicitly express this to avoid a hefty inheritance tax bill.
At the moment there are no specific guidelines or methods for reporting outright gifts at the point that they are made meaning that the obligation has always been centered on the executors of the estate to make the HMRC aware of any gifts during the deceased's lifetime and especially those made within the last 7 years.
However changes to these rules have meant that the HMRC will no longer just focus on estates that are in excess of the Nil Rate Band at the time of death (and where there is potential charge to IHT).
Now the HMRC will look further into the estates where it seems that no tax charge arises in an attempt to maximise the 'tax take'.
The Wills Solicitor further went on to advice about how best to give a gift to avoid an Inheritance Tax Bill being levied at you: If any gift is in the shape of Cash, Cheque or even a Chattel (a sentimental piece of personal property like jewellery) a letter should also be included along with the jewellery that states the gift givers intent to give the gift.
If the value is known then it should be included in the letter along with the date and a signature by the giver.
If the gift is intended as a loan, then a promissory note should be signed and dated by the recipient.
Avoid the use of "Side letters.
" A Side letter is a letter that explicitly states that, if for whatever reason the relationship breaks down between the donor and the receiver then the donor can claim the gift back.
In order for the gift to be free of Inheritance tax then it must be without this regulation and any letters that fetter the gift to this then the gift because IHT liable.
A senior manager at the leading wills solicitor has claimed that the whole Inheritance Tax Process is not as complicated as it need be and if the right advice can be given it can be made a lot clearer for all parties.
As can be seen above, correct documentation and holding proper records can make the world of difference to how easily an estate can be manages can speed the whole process along during a painful period in anyone life.
They further advise anyone who intend to donate their money to their family as a "gift" should ensure that they make sure that they explicitly express this to avoid a hefty inheritance tax bill.
At the moment there are no specific guidelines or methods for reporting outright gifts at the point that they are made meaning that the obligation has always been centered on the executors of the estate to make the HMRC aware of any gifts during the deceased's lifetime and especially those made within the last 7 years.
However changes to these rules have meant that the HMRC will no longer just focus on estates that are in excess of the Nil Rate Band at the time of death (and where there is potential charge to IHT).
Now the HMRC will look further into the estates where it seems that no tax charge arises in an attempt to maximise the 'tax take'.
The Wills Solicitor further went on to advice about how best to give a gift to avoid an Inheritance Tax Bill being levied at you: If any gift is in the shape of Cash, Cheque or even a Chattel (a sentimental piece of personal property like jewellery) a letter should also be included along with the jewellery that states the gift givers intent to give the gift.
If the value is known then it should be included in the letter along with the date and a signature by the giver.
If the gift is intended as a loan, then a promissory note should be signed and dated by the recipient.
Avoid the use of "Side letters.
" A Side letter is a letter that explicitly states that, if for whatever reason the relationship breaks down between the donor and the receiver then the donor can claim the gift back.
In order for the gift to be free of Inheritance tax then it must be without this regulation and any letters that fetter the gift to this then the gift because IHT liable.
A senior manager at the leading wills solicitor has claimed that the whole Inheritance Tax Process is not as complicated as it need be and if the right advice can be given it can be made a lot clearer for all parties.
As can be seen above, correct documentation and holding proper records can make the world of difference to how easily an estate can be manages can speed the whole process along during a painful period in anyone life.