Some 1,390 estates paid inheritance tax (IHT) on gifts in the 2023/4 tax year based on the latest available data from HMRC, a 6% rise year-on-year.
Families paid £315m in IHT in 2023/4, up from £302m the previous year, according to analysis of HMRC data by law firm TWM Solicitors.
The data precedes the announcement of unused pensions being added to the IHT net, leading to many families looking to gifting to reduce future IHT liabilities.
David Lunn, partner in the private client team at TWM Solicitors, warned that gifting without taking advice can create unexpected tax liabilities.
He said: “The Government is increasing its scrutiny of IHT – a wise response for families is better and earlier planning. That’s the best way to avoid unnecessary Inheritance Tax and to make sure valuable reliefs and exemptions are not lost.
“It is also a misconception that there is no point taking advice if you are unlikely to have a life expectancy exceeding seven years. Even then there are some circumstances where gifting can reduce the IHT bill so, whereas taking early advice is best, taking late advice may still make a difference.”
Over one in five (22%) of retirees plan to increase their financial support for loved ones over the next five years as a result of the changes to IHT rules, according to research from Investec Save.
According to the research, over the next five years the financial value of help for family members will increase, with more than half (52%) of those questioned expecting to give money. That includes 18% who expect to give £20,000 or more. Around 6% estimate they will give £50,000 or more.
Meanwhile, IHT receipts for April to September reached £4.7bn, a rise of £0.3bn from the same period last year.
Andrew Zanelli, head of technical engagement at Aberdeen Adviser, said the increases in IHT receipts demonstrated an opportunity for financial advisers.
He said: “It means retirement and estate planning can no longer be treated as entirely separate conversations. Advisers are already seeing growing demand from clients who want to understand how their pensions, investments and other assets work together, and how they can pass wealth on effectively.
“This creates both challenges and opportunities. It encourages a more holistic approach, bringing together retirement income, gifting and longer-term legacy objectives. It also raises questions about how advisers support families across generations, including younger family members who may not be clients today but could increasingly benefit from being part of the advice journey.”
Rachael Griffin, tax and financial planning expert at Quilter, called on the Government to increase gifting allowances.
She said: "Given the scale of that change, we can only hope the government takes another look at the gifting rules. Increasing the gifting allowances would give people greater scope to pass money down during their lifetime as more wealth is potentially dragged into the inheritance tax net. That may be wishful thinking, but the existing gifting allowances look increasingly out of step with the scale of the changes coming down the track.”