Inheritance tax receipts hit £3.7bn in the first eight months of the tax year and there is little indication that less will be paid over the course of the tax year 2018-19.
It prompts the message that one thing individuals can consider doing is reducing the value of their estate, and consequently the inheritance tax levied on that estate, by gifting monies away.
Mike Walker, financial planner at Prest Financial Planning said: “If you have a potential liability to inheritance tax then one of the easiest things you can do to reduce this is to take advantage of your full gifting allowance. In each tax year an individual can give away up to £3,000 or a total of £6,000 per couple which immediately falls outside their taxable estate.
“This may not sound like a huge amount but over 20 years it would amount to £120,000 taken out of a couple’s taxable estate and potentially given to their heirs at a time of life when it makes the most difference to them.
“It is also important to note that, if it has not been used, the previous year’s gifting allowance can be carried forward to the current tax year. This means that, if they made no qualifying gifts in 2017-18, a couple could potentially give away up to £12,000 in 2018-19 without any inheritance tax implications.
“They need to act relatively quickly, however as any unused gifting allowance can only be carried forward one year. So to make use of any unused allowance from 2017-18, individuals and couples would need to act before the current tax year ends on 5 April 2019.”
Sean McCann, chartered financial planner at NFU Mutual, said: “Inheritance tax is deeply unpopular and fiendishly complicated. Recent changes have just added to the problem and in many instances the complexity of the rules means that families are missing out.
“Some people will give substantial amounts of money to family members this Christmas which can also have inheritance tax benefits. The latest numbers from HMRC show people are passing on more and more to the taxman rather than their loved ones.”