One in four savers taking steps to reduce IHT, study finds

More than a quarter (28%) of affluent savers have taken steps to reduce a future inheritance tax (IHT), Paragon Bank research has revealed.

A survey by the group, which polled 2,000 active savers with balances in excess of £50,000, indicated that 68% of those had opted to gift cash.

Other common measures affluent savers are taking to reduce their IHT bill include increasing spending on their lifestyle (37%), setting up a trust or other legal structure (27%) and establishing charitable contributions from their estate (23%). Paragon also found that 16% had gifted an asset, such as property or land.

The research showed of those who gift cash, a third (33%) give up to £3,000 per tax year, helping to stay within the annual gifting allowance. Meanwhile, a quarter (24%) had given single cash gifts in excess of £3,000.

Head of savings at Paragon Bank, Andrew Wright, said: “As IHT rules continue to evolve, many people are taking practical steps to safeguard their wealth for future generations, whether that means gifting cash, reviewing their wills or putting structures in place to manage how wealth is passed on.

“What is particularly striking is that those making lifetime gifts are largely doing so from a position of confidence. Most do not feel concerned about running short later in life, which suggests they are planning carefully and acting with purpose rather than simply reacting to future tax liabilities.”

He added: “Even with that willingness to act, IHT remains an area where many people still lack confidence. The rules can be complex, so it is important that savers take the time to understand their options and make decisions that are right for their long-term financial position, their families and the legacy they want to leave.”

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