Lawyers at Hodge Jones & Allen have sounded a warning to parents who gift large sums of money or property to their children to avoid inheritance tax. The organisation claims it is seeing an increasing number of cases where parents regret their generosity, particularly when their children get divorced.
Under current tax laws, individuals can give up to £12,300 to their children each year without incurring inheritance tax. However, gifting large sums of money or property can leave parents exposed to financial repercussions if their children's relationships break down.
When a couple gets divorced, the court may consider the gifts made by one spouse to the other as part of the divorce settlement. This can result in the parent losing control over the gifted asset and potentially facing a significant tax bill.
According to Hodge Jones & Allen, the problem is becoming more common as parents become increasingly desperate to avoid paying inheritance tax. The organisation is warning parents to think carefully before making large gifts to their children, and to consider seeking professional advice before doing so.
The implications of this issue are significant, particularly for parents who have already gifted large sums of money or property to their children. It highlights the importance of carefully considering the tax implications of gifting and seeking professional advice before making any significant gifts.