HM Revenue & Customs (HMRC) has warned it will be paying particularly close attention to lifetime transfers in its latest IHT and Trusts Newsletter.
Alan Smith, managing director of Capital Asset Management said: “Many gifts go unreported due to their informal nature – such as a parent giving his or her child money to help with grandchildren’s education costs or property purchase. These sums can be quite significant and so HMRC are keen to ensure that they are recorded for IHT calculation purposes. It will undoubtedly mean a further layer of administration and paperwork so it will be essential for individuals to seek out help and guidance of suitably qualified financial planners.”
In contrast, Margaret Jago, technical manager for Aegon Scottish Equitable, didn’t envisage a big increase in paperwork. Jago said: “Executors are probably pretty cautious already so I doubt that this will lead to a big change in behavior. Sometimes you get the feeling that the HMRC is looking out for specific situations but I think this is just a general reminder that you need to keep a note of any gifts made.”
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