Inheritance tax alert: Families rush to seize 'golden opportunity' saving 'tens of thousands' on bills - but time is running out

Stock markets have experienced significant volatility since the US president launched his global trade tariffs earlier this month, imposing double-digit tariffs on some Countries.

This market downturn has created what experts describe as a "golden opportunity" for tax-conscious families.

By transferring assets during this period of reduced valuations, savvy taxpayers can potentially save "tens of thousands" of pounds in future death duties.

Rachael Griffin, tax and financial planning expert at Quilter, confirmed some clients are strategically using the market volatility.

She said: "We're having conversations about how to mitigate tax and gifting and the more savvy ones are seizing this golden opportunity.

"Shares are the more obvious choice as the stock market is more volatile, but you can do this with any asset whose value falls."

Ian Cook, of wealth managers Quilter Cheviot, revealed that clients had already secured significant benefits. He noted some families had saved "tens of thousands of pounds" by transferring shares during stock market slumps.

Cook added: "If the circumstances are right then it's a shrewd strategy."

The most common strategy being used right now is the 'seven-year rule' for inheritance tax planning. This rule allows assets given as gifts to pass tax-free if the donor lives for at least seven years after making the gift.

If someone dies within seven years of gifting an asset, inheritance tax may still apply — but at a reduced rate. The key point is that the tax is based on the asset's value at the time it was gifted, not what it's worth later.

So if shares rebound after being handed over, the tax is still calculated on the lower, original value Financial experts note this approach effectively locks in the lower valuations caused by the current market turbulence.

Inheritance tax in the UK is charged at 40 per cent on assets above a £325,000 threshold, known as the nil-rate band. This allowance increases by £175,000 when leaving a main residence to direct descendants such as children or grandchildren.

There’s another benefit too: capital gains tax (CGT) savings.

Transferring shares to someone other than a spouse or civil partner is treated as a "disposal" and can trigger CGT. But if the shares have fallen in value, the potential tax bill is reduced.

Cook said: "In the case of the stock market, now is the perfect time to do it as you get a double whammy – a saving on capital gains tax in the short term, and then a long-term potential benefit on inheritance tax."

CGT is charged when assets are sold for a profit above the £3,000 annual exemption. Basic-rate taxpayers pay 18 per cent, while higher-rate taxpayers pay 24 per cent.

Jason Hollands, of wealth manager Evelyn Partners, called it a “canny strategy” — especially if the assets are likely to grow in value and be held long-term after the transfer.

He said: "For example, if you were thinking about making a lifetime gift of shares to your children, with the markets down quite a bit, it's a beneficial time to be doing it."

The timing advantage works regardless of how long the donor lives.

Hollands added: "If you live longer than seven years then it's inheritance tax-free anyway, but if you die before then it would save your beneficiaries tax."

Experts advise documenting asset values carefully, especially for less liquid holdings.

Griffin emphasised: "The important thing is to document the value of your asset."