![\"Cheerful](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2025\/12\/GettyImages-1406657355.jpg\")
\n\t\tSome people are gifting very big gifts this Christmas (Picture: Getty Images)<\/p>\n
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\n\t\tSome people are gifting very big gifts this Christmas (Picture: Getty Images)<\/p>\n
Tis the season to give gifts<\/a>, but some families have been handed heavy charges for being a little too generous.<\/p>\n More than 14,000 Brits have faced unexpected inheritance tax bills<\/a> after a relative died within seven years of gifting them cash or assets<\/a>.<\/p>\n These handouts \u2014 the largest of which were worth a staggering \u00a37.9 million each \u2014 were intended to circumvent the 40% inheritance tax by gifting part of their estate to a family member, at least seven years before passing away.<\/p>\n But this popular get-around<\/a> for wealthy individuals only works if the seven-year rule is followed. Those that fell shy have been hit with huge bills.<\/p>\n Of the 14,030 \u2018gifts gone wrong\u2019 that were liable for inheritance tax <\/a>in 2022-2023, the average value of them was \u00a3171,000 after exemptions and allowances, according to a freedom of information request from HM Revenue & Customs.<\/a><\/p>\n This means that if the relative who gave them the donation died within three years (the threshold at which you pay the full 40% tax), they\u2019d be lumped with an eye-watering bill of \u00a368,400.<\/p>\n When it comes to the top 25 largest \u2018failed gifts\u2019 \u2014 those worth \u00a37.9 million \u2014 the inheritance tax bill would\u2019ve been \u00a33.1 million if the death occurred within the three year window.<\/p>\n \t\t To view this video please enable JavaScript, and consider upgrading to a web Inheritance tax is a tax on the property, money, and possessions of someone who has died, with the standard rate being 40%.<\/p>\n You usually won\u2019t pay this tax if your estate is worth less than \u00a3325,000, or if you leave everything above that financial threshold to your spouse, civil partner, a charity<\/a> or a community amateur sports club.<\/p>\n If you\u2019re passing your home down to your children or grandchildren, you won\u2019t have to pay the tax unless it exceeds a \u00a3500,000 threshold.<\/p>\n The inheritance tax then only applies to the part of your estate that is above that financial cut-off. So if you had an estate worth \u00a3600,000 and the portion that\u2019s tax free is \u00a3325,000, you\u2019d pay the 40% tax only on the \u00a3275,000 that\u2019s left over. This amounts to \u00a3110,000.<\/p>\n Some gifts you give while you\u2019re alive can be taxed after you die, although the seven-year rule means you won\u2019t be taxed on it, as long as you live for more than seven years after the gift was given.<\/p>\n If you do pass away less than seven years after the gifting, the amount of tax will depend on the \u2018taper relief\u2019 you receive, which is on a sliding scale.<\/p>\n If you die less than three years after, the gifts will be taxed at the full 40%; if it\u2019s three to four years you\u2019ll be taxed at 32%; four to five years and you\u2019ll be taxed at 24%; five to six years will amount to a 16% tax; and six to seven years will incur an 8% tax.<\/p>\n \t\t Even if you\u2019re not rolling in the dough, this seven-year rule may still apply to you.<\/p>\n \u2018Strategic gifting was once seen as a tactic of the super-affluent, but has now gone mainstream,\u2019 says Michelle Holgate from investment firm RBC Brewin Dolphin, which submitted the freedom of information request.<\/p>\n \u2018We\u2019re getting inquiries in particular from farmers looking to pass on assets such as land to the next generation without triggering a big inheritance tax bill.<\/p>\n \u2018People are naturally protective of family businesses, which in some cases have been built up over several generations. They want to keep these businesses in the family and see them thrive long into the future.\u2019<\/p>\n And the chancellor is making more and more of our assets taxable. Last year, she announced inheritance tax on private pension<\/a> pots from April 2027, a UK first.<\/p>\n She also altered the circumstances around relief for agricultural property and business property, which had been a lifeline for farmers and family businesses to pass on many of their assets free from tax.<\/p>\n From April next year, the reliefs will be limited to the first \u00a31 million worth of the estate, and anything above that will have an inheritance tax of 20%.<\/p>\n The Office for Budget Responsibility (OBR) forecasts these changes mean inheritance tax revenue will nearly double in the next five years to \u00a314.3 billion.<\/p>\n \t\t\t\tFarmers in uproar\t\t\t<\/p>\n On November 19, 2024, thousands of farmers descended on Westminster to protest Rachel Reeves\u2019 inheritance tax change<\/a>.<\/p>\n About 1,800 National Farmers\u2019 Union (NFU) members \u2013 three times as many as originally planned \u2013 took part with banners condemning Labour\u2019s change.<\/p>\n One striking banner read: \u2018Stop killing the people who feed you.\u2019<\/p>\n To view this video please enable JavaScript, and consider upgrading to a web Among the procession were children on toy tractors who led a small march, as well as stars like Kaleb Cooper<\/a> and Jeremy Clarkson<\/a>, who spotlight the issues facing farmers on the show Clarkson\u2019s Farm.<\/p>\n Kaleb said: \u2018It\u2019s the passing down of your family farm to the next generation. If I want to pass my business onto my child, I don\u2019t know if he can afford to take that on with the new tax bill.<\/p>\n \u2018It could be unprofitable to make a livelihood off that business \u2013 that\u2019s why everyone has come together today.\u2019<\/p>\n Do you have a story to share?<\/p>\n Get in touch by emailing MetroLifestyleTeam@Metro.co.uk<\/a>.<\/p>\n Arrow Arrow Arrow![\"Family](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2025\/12\/GettyImages-1840673354.jpg\")
\n\t\tThe largest \u2018failed gifts\u2019 were worth \u00a37.9 million (Picture: Getty Images)
\nWhat you need to know about inheritance tax<\/p>\n
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\n\t\tRachel Reeves\u2019 changes since being chancellor has also affected inheritance tax (Picture: Carl Court\/Getty Images)
\nIt\u2019s no longer just for the wealthy<\/p>\n
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