Britons waste billions in Inheritance Tax

Published 02nd Apr 2007

UK taxpayers are wasting millions of pounds due to poor Inheritance Tax (IHT) planning

According to Unbiased.co.uk, the website promoting the benefits of independent financial advice, the overall amount of inheritance tax payments totalled £3.5 billion last year, including £1.5 billion in avoidable payments.

The amount of wasted IHT payments has risen by 19 per cent compared to the previous year, equalling an increase of over £250 million.

Lack of IHT provision represents the biggest tax wastage in the UK and with house prices continuing to rise, this trend looks set to continue with more properties now valued at more than the current IHT nil rate threshold of £300,000 than ever before.

Unbiased.co.uk’s research is part of its annual campaign, TaxAction, which aims to encourage people to think sensibly about how to avoid wasting money through paying unnecessary tax.

The research shows that the main cause of “death tax” wastage is the inclusion in personal estates of the proceeds of life assurance policies, which if written in trust, would not be subject to inheritance tax.

IHT is the second most resented tax amongst the British public, only beaten to the top spot by council tax. Despite this dislike, nearly three in four people in the UK admit to not having taken any steps over the last twelve months to reduce their tax burden.

David Elms, Chief Executive of Unbiased.co.uk, said: “Our research shows that people are throwing away a huge amount of money on unnecessary inheritance tax payments. IHT liability is paid by beneficiaries, often at a time when they are grieving over a lost friend or family member.

“Without advanced tax planning, increasing amounts of IHT will fall into the hands of the tax man. It is crucial that people see an independent financial adviser to discuss their tax liabilities remembering that it is legal to mitigate inheritance tax. An IFA will ensure that all advice provided is appropriate for their client’s personal and family financial situation.”
By Jennifer Lowe

Source: ' Personal Finance & Savings '

View All Latest News