Gifting money or assets to family and friends is something many people do with the best of intentions. Whether it’s helping children onto the property ladder or supporting loved ones day-to-day, it can feel like a positive and straightforward decision.
However, recent research from Canada Life suggests there’s a potential issue many people aren’t aware of. More than half (54%) of over-55s who have given financial gifts in the last seven years have not kept any record of them. Only 13% said they stored this information securely, while others relied on informal notes, or nothing at all.
This becomes important when it comes to IHT. When someone dies, their estate must be reported to HMRC along with the details of gifts made in the seven years before death. Without accurate records, this process can become much more difficult.
Put simply, if there’s no clear record of what was given, when, and to whom, executors may struggle to complete the paperwork properly. That can lead to delays, additional questions from HMRC, and unnecessary stress for family members at an already difficult time.
Another common issue is that many people don’t realise what counts as a “gift” for IHT purposes. It’s not just cash, items like jewellery, furniture, shares, or even property can all fall within the rules.
The research also found that people may be giving away significant sums without fully tracking them. Among those who could estimate, the average gifted over seven years was
£42,056, far above the standard annual gifting allowance.
In short, generosity is a wonderful thing, but keeping a clear record of it can make a big difference later on. HMRC provide a form – IHT403 – for exactly this purpose – and we would highly recommend that clients fill this form out whenever they make a gift, so that it becomes easier to prove later on.
If you would like any advice or information about gifting then please get in touch.
