The number of families paying the 40 per cent tax on significant gifts has more than doubled from 590 in 2011-12, suggesting that families are rushing to give away their wealth in order to bring their estates under the £325,000 threshold.
Rapidly rising asset prices are forcing more families to exceed this tax-free allowance, which is frozen until 2028. A higher allowance of one million pounds applies to couples who leave their homes to their children after their deaths.
In total, 1,300 families paid £256 million in inheritance tax on large gifts, compared with £101 million in 2011-12. This represents a real-terms increase of 119 percent, according to wealth manager Evelyn Partners, which obtained the data.
Ian Dyall of Evelyn Partners said: “These figures show that a growing number of recipients may find themselves unexpectedly paying inheritance tax on the death of the donor, for a gift they could have received several years ago. How many had the liquid assets to pay the tax? How many had invested the money in illiquid assets such as a new home?”
He added: “We are seeing that over the years more and more families are making large gifts during their lifetime because they want to support their children or grandchildren.
“Some families may be becoming more aware that such gifts could reduce the size of their estate. So it is a deliberate tactic – but the donor simply does not live long enough for the estate to receive the full tax benefit.”
