The IFS has recently published a report detailing the findings of a study into patterns in the lifetime giving and receiving of lifetime gifts and loans. As someone working in private client tax it makes an interesting read although there are very few surprises in the findings.
Gifts continue to be more commonly reported than loans, parent to child continues to be the most common interaction, and lifetime events such as inheritances and house purchases continue to show correlation to the making of gifts.
The word tax only appears in one sentence in the report. There’s a well worn adage in tax that we should not let the tail wag the dog and tax is only ever one of the factors taken into account when our clients speak to us about inter-family transfers. But nonetheless it is always a factor and the tax regimes at play can often influence the approach, timing or subject matter of a lifetime wealth transfer.
The report also touches on the interaction between lifetime giving, which is timed and controlled by the donor, and the rather more arbitrary inheritance of wealth following a death. Having worked with a lot of families regarding lifetime transfers there is a common theme whereby seeing the use to which the money is put and timing it at the point at which the done most needs it is a feel good factor for the donor.
So life, family and financial reality might remain the when and why behind family wealth transfers but tax advice should most definitely be part of the what and how.
The next step
If you have any questions regarding this insight, please contact Graham Boar, or your usual UHY adviser.
