According to a recent report by Canada Life a worrying proportion of people are unaware of their potential Inheritance Tax (IHT) liability.
Surveying over-45s with assets exceeding the IHT threshold of £325,000, the report found that 36% were unaware their main residence may be subject to tax.
Whilst these figures may be surprising, the report also found that 71% of the UK population did not know that the IHT threshold is set at £325,000. This apparent lack of knowledge is worrying, as it may lead to families being hit by larger than expected (and larger than necessary) tax bills.
The importance of preparing for the future cannot be over-emphasised, but despite this, 27% of people surveyed aged 45 or over, whose assets exceeded the £325,000 IHT threshold, did not have a will in place. Not having a will can lead to further complications for loved ones and means that wealth will be passed on under intestacy rules and not necessarily where intended.
These figures come as HMRC statistics show that the Treasury’s inheritance tax haul is higher than ever with receipts for 2017/18 standing at over £5.2bn.
With the end of the tax year fast approaching, now is an ideal time to review your IHT position – acting now rather than later could potentially save a significant sum further down the line. More information on end of year tax planning can be found here.
This publication has been prepared by RRL LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.