Almost half (44 per cent) of UK parents would gift more money to their children if the rules governing Inheritance Tax (IHT) were less confusing, a new study has revealed.
The research, which was recently published in Moneywise magazine, suggests that more than a third (35 per cent) of UK grandparents feel the same way, while a further 40 per cent of Britons are ‘put off’ gifting altogether because they are afraid of falling foul of IHT thresholds.
The survey found that, for the most part, the people surveyed had a very poor understanding of the IHT rules affecting financial gifts.
When respondents were asked how much they thought they were able to gift each year without incurring IHT, the majority of people guessed £1,575 – despite the fact that the actual allowance is almost double this, at £3,000.
Respondents were equally unaware that this amount doubles to £6,000 if the individual has not made any gifts in the previous financial year.
The study’s findings, which suggest that many Britons are baffled by the UK’s Inheritance Tax framework, come shortly after the Government confirmed that a review of IHT would be carried out by the Office of Tax Simplification (OTS) in coming months.
In recent days, it has been confirmed that the OTS will publish a report on the processes and complexities of IHT later this year – suggesting that there is a very real chance that IHT will be simplified in the near future.
However, the Chancellor, Philip Hammond, will be responsible for any final decisions made on tax policy following the review and its subsequent recommendations.