A recent report has revealed that families across the UK collectively paid more than £1 billion in Inheritance Tax (IHT) because gifts were made too late in life. Figures obtained from HMRC show that over 5,000 estates were affected between 2020 and 2024. 

Many people choose to give money, property or other assets to loved ones during their lifetime. However, what is often overlooked is the seven-year rule. In most cases, you must survive for seven years after making a gift for it to fall completely outside your estate for inheritance tax purposes. 

If you die within that seven-year period, the gift may still be taken into account when calculating the tax payable on your estate. HMRC figures show that, in the 2023/24 tax year alone, families paid around £315 million in inheritance tax on gifts where the donor did not survive for seven years. 

While no one can predict the future, these figures serve as an important reminder of the benefits of planning ahead. Early estate planning can help ensure that your wishes are respected and may reduce the financial burden on those you leave behind. 

Inheritance tax can be a complex area, and the right approach will depend on your personal circumstances. Taking professional advice at an early stage can help you make informed decisions about your estate and your family's future. 

If you would like advice on inheritance tax planning, lifetime gifting or preparing a Will, The McKinstry Company would be pleased to assist. Please contact our team for further information.