Sir Keir Starmer's Labour government are considering a possible crackdown on "inheritance tax" which could decrease HMRC relief for parents who gift children money. 

Inheritance tax is paid on the estates of people who have sadly passed away.

Now, however,  families could be hit hard if they've gifted children cash or assets in the past seven years.

The controversial tax is charged at 40 per cent on estates which are worth more than the £325,000 but there is relief UK households can take advantage of to reduce their liability. 

The levy is charged at 40 per cent on estates worth more than the £325,000 threshold.

Gifts made within three to seven years before someone's death are taxed on a sliding scale referred to as "taper relief".



Ian Dyall, the head of estate planning at Evelyn Partners, told BirminghamLive what the impact of a IHT "crackdown" could have on households.

He explained: "One relatively easy way for the Government to make it more difficult for families to avoid paying IHT would be to tighten up the gifting rules – and specifically the seven-year rule which means that most gifts of any size leave the donor’s estate after this time period.

"The annual gifting limits – which allow smaller gifts that leave the estate immediately - are very modest, having been frozen for more than four decades, so there’s not much wriggle-room there.

"The Chancellor could however look at restricting the rules around "potentially exempt transfers", which provide an incentive to give away wealth during a lifetime.


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"That’s not just because the assets will leave the estate altogether if the giver is still alive after seven years, but also because after two years there is a chance the gift(s) could be entitled to taper relief, where the IHT rate falls to as low as 8 per cent.

"The rule could be extended out to 10 or more years or even abolished, but this is unlikely to raise much for the Treasury in this Parliament unless it is applied retrospectively, which seems unlikely.

"Plus, it could jam up the transfer of wealth to younger adults who are more likely to spend it, restricting the flow of liquid funds back into the economy."