A recent survey has revealed a worrying lack of understanding of inheritance tax (IHT), which could leave many families suddenly facing an unexpected tax bill.
The survey, by insurer Canada Life, found that 61% of adults in the UK over the age of 45, who have assets amounting to more than £325,000, are unaware that this is the individual IHT threshold.
In addition, 52% of respondents did not know that the rate of IHT is 40%, with 98% of those believing it to be lower.
Many respondents were also unaware of what assets count towards IHT liability. Around 25% did not know that their family home will be liable for tax, as will ISAs (not known by 42%) and cash savings and investments (28%).
“This survey focused on people with enough assets to potentially trigger an inheritance tax bill who are middle aged or older,” commented Karen Stacey, Head of Technical Services at Canada Life. “It is deeply concerning to see so little understanding about inheritance tax among this group, especially for a subject about which people care so passionately.”
“Ever galloping house prices over the last few decades is one of the main drivers of why more people are falling foul of inheritance tax, but when coupled with other assets estate planning becomes very complicated,” she added. “To prepare, you need to know you face a potential issue and planning ahead with professional advice can help people to legitimately avoid leaving their loved ones with crippling bills to pay. IHT is not the preserve of only the very wealthy.”
For expert legal advice on inheritance tax and estate planning then contact our specialist lawyers today.