Recent research has revealed that as much as £595 million could be wasted in unnecessary Inheritance Tax (IHT) payments this year, which is an increase of £45 million compared to 2015.
IHT is charged to the recipients of an inherited estate when its value is higher than £325,000, with 40% tax placed on anything that exceeds that threshold. The IHT threshold has not increased over the last year, but is doubled for married couples who between them can pass on up to £650,000 to their beneficiaries without it being liable to tax.
The research, by website unbiased and Prudential, found that only 21% of UK taxpayers expect the value of their estate to exceed the IHT threshold when they die, although current uncertainty around financial markets following the EU Referendum in the UK may well see this figure fall.
In London, which stands apart from the rest of the UK in terms of property prices, this percentage increases to 44% of people who anticipate their estate to exceed the IHT threshold.
“Whether you expect your estate to pass the IHT threshold or not, planning with a qualified adviser for how to pass your estate not only protects your wealth for future generations, but importantly can alleviate stress for your family at a time when they’re likely to be most emotionally strained,” commented Karen Barrett, chief executive at unbiased.co.uk.
“Wills and inheritance can frequently become contentious issues, and if, for example, your children are faced with the decision to let go of the ‘family home’ or be forced to sell something of their own to cover the tax bill, the inheritance can be more of a bust than a boom,” she added.
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