‘Shocking’ inheritance tax rules could see parents hit in pocket just for borrowing books

Graham Southorn shares inheritance tax tips ‘Shocking’ rules mean parents could trigger inheritance charges by simply borrowing books from their old home, an MP has warned. Rocketing property prices, coupled with stagnant tax thresholds, have meant the number of families being stung by death duties has doubled over the course of the last decade. In order to avoid pay a 40 per cent charge, many families opt to give away their properties during their lifetimes, with such gifts becoming free from inheritance tax once seven years have passed. Nevertheless, people can still be caught out by so-called ‘gift with reservation of benefit’ small print aimed at stopping those making the award from continuing to benefit from the asset which they previously owned. For example in order to avoid charges, they must pay a market rate of rent in order to continue to live in the property and cannot visit regularly with the rules being applied. Ranil Jayawardena, Tory MP for North East Hampshire HM Revenue & Customs’ inheritance tax manual warns they could even be clobbered if they visit their former library to borrow books more than give times a year. Additionally they may be liable if they accept more than three lifts a month in a car which was previously gifted, or if they stay with the new homeowners for more than a month a year. More than 2,000 families been adjudged to be in breach of the rules since 2019, shelling out £700million in tax bills from which they thought they were exempt. Ranil Jayawardena, Tory MP for North East Hampshire, told the Daily Telegraph it was ‘shocking’ anyone could be taxed ‘just for seeing their grandchildren’. Inheritance tax charges have spiked to more than £7billion annually SUBSCRIBE Invalid email We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info He added: ‘This proves, once again, that we should get on and abolish inheritance tax altogether. ‘It’s a death tax. It’s a double tax. And now it’s been shown to be a tax on visiting your family. It’s not fair, it’s not Conservative and it needs to go.’ John Stevenson, Conservative MP for Carlisle, who spearheaded the All-Party Parliamentary Group on Inheritance Tax and Intergenerational Fairness, called for the ‘gift with reservation’ rules to be binned. He said: ‘Rather than look to abolish inheritance tax, the Government should be reforming it so that it is more straightforward and the rates can be reduced. Sajid Javid ‘understands argument’ for scrapping inheritance tax Trending