Nearly half (45%) of HNWIs have no written record of what they’ve gifted to loved ones, according to new research, leaving them at risk of falling foul of IHT rules.

Almost one in three (29%) rely on keeping mental notes on what they’ve gifted or plan to, while 17% simply have no record of what they’ve gifted in their lifetime, according to a Charles Stanley study.

The firm warned that without detailed written records of what has been gifted, it could leave loved ones with potentially costly and unexpected tax bills.

According to the study, just under half (48%) of HNW respondents said they have a written list of exactly what they’ve gifted or plan to gift. That will make the job simpler for any executors of an estate, who will be responsible for reporting any financial gifts through the IHT400 form, particularly those made in the seven years prior to death, Charles Stanley said.

Almost all, 97%, said they have made or plan to make some form of financial gift to family members or friends, whether it be money for them to travel, use for a house deposit, or to start a business.

Of those who have made financial gifts in the last year, the amount averaged £8,367. However, that exceeds what individuals can give away under the current gifting rules of up to £3,000 each tax year. If individuals were to pass away within seven years of making the gifts, beneficiaries would be subject to paying inheritance tax on the gifts.

Looking across generations, Baby Boomers (aged 61-79) said they have gifted an average of £11,756 in the last year, while generation X (aged 45-60) have gifted an average of £6,795.

Harry Bell, director of Financial Planning at Charles Stanley, said: “With IHT thresholds also remaining frozen and private pensions set to be included in estate valuation from 2027, gifting will only become more popular as a tool for families to pass their wealth on.”

He warned there is a concerning lack of understanding around gifting and the potential unintended consequences if not done appropriately.

Mr Bell said: “Making gifts by the book is what really matters. While many claim to keep a record of what gifts have been made, it’s only those with written records that HMRC can track. Any other gifts made without justification will be liable to IHT if the estate threshold exceeds £325,000.”