Fewer people should have to pay tax on gifts given just before death, under proposals for a major overhaul of the inheritance tax system.

At present, when someone dies within seven years of passing on money, property or possessions to loved ones, tax of up to 40% must be paid.

The Office of Tax Simplification (OTS) has suggested that this deadline should change to five years.

The OTS also said the tax should be made much easier to understand.

If the changes are approved by the Treasury, it could affect the finances of those who are financially planning in older age, and their younger relatives – many of whom are said to be relying on inheritance.

How does inheritance tax work?

Inheritance Tax is a tax on the estate –

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