In current market conditions, many bereaved people are fi nding that the investments they inherited have dropped in value. In a little-known loophole known as IHT share loss relief, it may be possible to claim a tax rebate when certain qualifying investments are sold at a loss.
However, strict rules, criteria and exemptions apply. For example, to be eligible for the relief, the sale of the qualifying investment (shares listed on a recognised stock exchange excluding AIM, government bonds and/or holdings in investment funds) must be within 12 months of the date of death. Interestingly, few people reclaim the overpaid tax, with just 1,640 taxpayers a year on average (between 2014 and 2019) applying for refunds4. Tax treatment varies according to individual circumstances and is subject to change. 4 FoI request Boodle Hatfield, 2022
Rather than focusing on inheritance as the best way to pass on wealth, over-55s are increasingly looking to help their families out fi nancially during their lifetimes. This trend towards ‘living legacies’ has been revealed in recent research5 and has been in part due to increased life expectancy pushing up the average age at which younger generations inherit from their parents. People born in the 1980s are now predicted to receive their inheritance at age 64 on average, compared to 58 for those born in the 1960s.
The fear of running out of money during retirement has previously prevented many older people from offering fi nancial support during their lifetime. This concern appears to be lessening, however, with a third of respondents to the research saying they’d be unwilling to help a family member onto the property ladder without knowing how much they’d need in retirement – compared to half of respondents to the same survey in 2016.
Aviva’s Matt McGill commented, “This increasing tendency towards considering helping out now rather than beneficiaries receiving an inheritance after death is perhaps a reflection of the turbulence and uncertainty that everyone has been through since we previously ran our survey in 2016, and which shows no sign of diminishing. Along with the hardship people have faced, it’s also been a time of reflection for many and this could have included a resolution to live more for the moment and help family and loved ones now.” 5 Aviva, 2022