In total 68 percent of people said they would divide their assets evenly when it came to working out how much to leave loved ones, according to research by investment management company Charles Stanley. However, statistics show that £50 billion pounds is given away to HM Revenue and Customs (HMRC) every year in inheritance tax payments which could be avoided.
When it comes to inheritance it can be a touchy subject with Britons preferring not to talk about it, but new research has disclosed that two thirds of parents intend to share their inheritance between their children equally.
However, it does mean that one third (32 percent) are planning on giving more to one child than another.
Some reasons for this were that one sibling was worse off or one had already received a lot of financial help.
Whoever parents decide to give their inheritance to, it’s a good idea to know their allowances in order to avoid giving it all to the taxman.
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Currently the threshold is set at £325,000 so there’s normally no Inheritance Tax to pay if either:
- the value of the estate is below the £325,000 threshold
- everything above the £325,000 threshold is left to a spouse, civil partner, charity or a community amateur sports club
However, if it’s less than £325,000 it still needs to be reported to HMRC.
The threshold is also increased if people give it to children.
On the government website it states: “If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.
“If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die.
“This means their threshold can be as much as £1 million.”
When it comes to gifting, the annual allowance is £3,000 each tax year that people can give to loved ones without paying any tax.
If the annual allowance isn’t used, people can carry it forward one tax year so this could potentially increase to £6,000 or £12,000 for a couple.
Britons can also give up to £250 per person under the small gift exemption rule.
Plus there’s an extra £5,000 allowance if someone is getting married so it’s advisable to discuss one’s intentions with a professional before making a decision.
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