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Could lifetime gifting to avoid Inheritance Tax have risks?

View profile for Helen Taylor TEP
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Older couple talking to solicitorGifting inheritance early to children is becoming ever more popular by parents. For some, it is seen as the perfect way of addressing two birds with one stone: helping their children get onto the property ladder and reducing the amount of Inheritance Tax that will be payable on their estate.


If you are thinking, ‘this sounds too good to be true, what are the consequences?’ you are asking the right question. This isn’t because it is always the wrong thing to do. Rather, it is because if you do it, you need to be aware of the risks. Not only could your chosen recipient be liable for an Inheritance Tax bill if you don’t survive a sufficient amount of time after making the gift (which they might not be able to afford), but you could also be inadvertently exposing yourself to a Capital Gains Tax liability which will be payable now, not in the future.


Model house wrapped in a red bowThe risks to making lifetime gifts do heavily depend upon exactly what assets you are gifting, e.g. cash, property etc. and your personal circumstances. It may be a reasonable measure to take, but only if you have obtained the appropriate advice. By obtaining the appropriate advice, you can understand exactly what the risks are and if you do decide to proceed, you can take steps to mitigate the risks should they occur. Otherwise, it could result in unintended consequences that cost you more than the potential liability you were seeking to avoid!


If you would like to obtain advice or guidance regarding Lasting Power of Attorney or would like to make or review a Will, please contact our Wills team on or call Northampton: 01604 828282 / Milton Keynes: 01908 660966. Our experienced and friendly team will be able to provide answers to your questions or arrange an appointment with one of our Solicitors.