Taxman should help elderly ‘gift’ money to young
CONFUSION over inheritance tax means grandparents and parents hang on to their wealth even if their children and grandchildren are struggling, a survey has found.
Almost half of parents and over a third of grandparents would gift more money to children while alive if they could do it tax-free.
On average, people believe they can give away £1,575 a year without falling foul of the taxman.
In fact, that figure is £3,000 a year but just one in 10 of the 4,000 survey respondents knew.
Most bewildered by the rules around gifting were women (47 per cent) against 30 per cent of men. Liz Alley, of wealth managers Brewin Dolphin, said: “Inheritance tax can be incredibly confusing.
“It’s music to my ears that the Chancellor recently wrote to the Office of Tax Simplification for a review of inheritance tax.
“We’d also like to see the annual gifting allowance increased. It has remained at £3,000 a year since the early 1980s and we believe that if this was increased we would see more families pass wealth down.
“This will give younger people the financial leg-up so many need, and help older generations from an inheritance tax perspective.”
Experts say those wanting to financially help out the younger generation this year should take advantage of the annual gifting allowance of £3,000 a year.
They can also gift money for big life events, such as marriage, which qualifies for a tax-free £5,000 from parents and £2,500 from grandparents. Relatives can also contribute to Junior ISAs which are tax-free for the giver and recipient.