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- Survey reveals three fifths of people with potential inheritance tax bill unaware their estate may be liable for inheritance tax – over 60% didn’t know that inheritance tax rate is charged at 40%
- HMRC tax receipts show that families are losing out due to lack of knowledge
- 78% believe wealth should stay in the hands of their family without being subject to inheritance tax
Over half of respondents (52%) were not aware that IHT is levied at a rate of 40%. Of those, just 2% thought the rate was higher meaning the vast majority could be underestimating their estate’s potential tax bill.
Of those who expect to leave an inheritance, the average amount they expect to leave is £862,856. This would leave almost £540,000 (£537,856) above the IHT threshold (called the nil-rate tax band), which when taxed at 40% would leave their estate with a bill of £215,142.
The lack of knowledge also extended to the assets people thought may be liable for inheritance tax, with a high proportion of respondents mistakenly thinking some assets are not subject to inheritance tax.
Housing accounts for biggest IHT liabilities
The majority of those with a potential inheritance tax bill have this accounted for by the value of their property alone, as almost two thirds (65%) have a property worth more than £325,000. A quarter (25%) had property wealth of over £500,000, putting them well above the nil rate band even before other assets are taken into consideration.
Inheritance tax remains a subject people feel passionate about.
A large majority (78%) thought that wealth should be passed from one generation to the next without any tax being due, yet the fact is that many don’t understand the completely legitimate ways they can reduce their family’s inheritance tax bill.
Most of these issues are avoidable, there are a number of legitimate ways to reduce inheritance tax but to use them, people need to know about them as well as have a deeper understanding about the thresholds, rates and exemptions.
Seeking financial guidance at an early stage can be highly beneficial. We are experts in protecting your wealth. For more information, contact us today.