A new survey suggests that a worrying number of Britons are ignoring Inheritance Tax (IHT) and have not taken any measures to determine or mitigate their potential liability, despite news that 45,000 UK households were hit with IHT bills in 2016/17.
Data from the Office for National Statistics (ONS) suggests that the Treasury raked in a record-breaking £4.7bn in IHT during the last financial year, while forecasts predict that IHT receipts will rise by more than a third over the next five years.
Yet despite this, a new study published in the Financial Times in recent days has found that one in ten Britons who plan on passing on a legacy after their death have not sought specialist advice to determine whether there could be an IHT liability.
The study, which was commissioned by insurance company Drewberry, also revealed a worrying lack of IHT knowledge and understanding among respondents.
12 per cent of those quizzed said that they thought their housing stock would be free from IHT, while ten per cent added that they thought ISAs were IHT-exempt. Both assumptions are actually incorrect.
In reality, IHT is levied at a rate of 40 per cent in the UK on all assets valued above the existing IHT threshold or ‘nil rate band’ of £325,000.
Despite this, there are many ways of mitigating IHT – such as making charitable donations in Wills, which are subject to a lower tax rate, or by leaving property to direct lineal descendants under the new residence nil rate band (RNRB), which can enable an additional £100,000 in property value to be passed on tax-free.
A specialist solicitor can offer an assessment of your current situation and provide tailored advice to suit your unique circumstances.