Most taxpayers aged 50 and above, who have an inheritance tax (IHT) bill, are not aware that the money they intend to leave behind could be subject to Inheritance Tax. A recent survey, conducted by financial advisors deVere Group, found that a significant proportion of individuals in the UK aged 50 and over are uncertain about the rules governing IHT.
The survey results highlighted that nearly three quarters of respondents aged over 50, with assets surpassing the IHT threshold, were unaware that the threshold currently stands at £325,000.
As it currently stands, any portion of an estate below the threshold remains exempt from IHT, whereas any part valued above £325,000 attracts a tax rate of 40%.
In recent years, there has been a growing tax liability as house prices have experienced a significant rise. Unfortunately, despite this surge, the IHT threshold has remained unchanged, resulting in many families with moderate levels of wealth being subject to this tax.
HMRC has collected a substantial £7.1 billion in IHT receipts during the last tax year, which emphasises the potential ramifications of families’ lack of awareness regarding inheritance tax rules, which could lead to significant tax bills.
According to HMRC, there has been a 24% increase in the number of individuals paying IHT.
There are options available to prepare for possible IHT tax bills such as the establishment of trusts, utilising gift allowances to pass on money to loved ones while reducing the size of your estate and considering joint ownership of properties with one’s spouse.
However, this starts with being well informed and engaging in early planning with professional advice to mitigate potential IHT issues and surprises. Such proactive measures can legitimately help individuals avoid burdening their loved ones with significant bills, ensuring that more of their legacy reaches them.
If you are concerned that you may become liable for Inheritance Tax, please contact a member of the team and we can help you to develop appropriate strategies.