According to a report featured in This Is Money, four in five people do not fully understand what Inheritance Tax (IHT) means for them. Furthermore, recent pension changes are set to make things even more confusing.
The article, which highlights statistics from a survey by Schroders Personal Wealth, reveals some worrying findings:
- Nearly four in five adults do not understand how IHT works or what their loved ones would need to pay.
- While 77% are familiar with what IHT is, the majority do not understand how this will impact them.
- More than 40% of people do not have a Will, with common reasons being lack of time to draft one or the belief that they are too young to have one.
Source: Read the full article here: Four in five don’t understand inheritance tax – and pension raid will make things worse – This Is Money
What Are the Current Inheritance Tax Thresholds?
In the UK, the standard Inheritance Tax rate (IHT) currently stands at 40%; however, it is only charged on the part of the estate that is above the tax-free threshold, which currently stands at £325,000, with an additional £175,000 allowance for those who pass on their own home on to a direct descendant.
Will More Families Be Caught Out by Inheritance Tax in the Future?
Currently, only a small percentage of households pay inheritance tax, around four per cent, as the total threshold for the levy can be increased to £1million for a married couple once the own home allowance threshold is added.
However, rising property values mean more estates are creeping above the IHT threshold, and from 2027, pension pots are set to be added to inheritance calculations. Subsequently, an increasing number of Britons will likely be set to pay inheritance tax in the coming years.
Are You Taking Advantage of Inheritance Tax Reliefs and Adjusting Your IHT Planning?
Despite these looming changes very few adults in the UK have made suitable adjustments to their financial plans, with others still unaware of existing gifting rules that could help reduce IHT liabilities.
Read some of our previous articles for related information:
- Have You Protected Your Estate Against The New Pension Changes?
- Does Your Property Value Automatically Make You Liable for Inheritance Tax?
How Inheritance Tax Planning Can Help Protect Your Estate
Inheritance Tax planning is a great way to plan for the future; typically, it allows a person to hand off some of their assets and finances to ensure that those set to inherit when they die do not have to face the costly burden of inheritance tax. If you think that your estate may be subject to inheritance tax, there are several planning measures you can implement to reduce the amount owed. Ways to manage IHT include:
- Putting assets in trust.
- Using existing gifting rules to help reduce IHT liabilities.
- Taking out a whole-of-life insurance policy.
Talk to our Inheritance Tax Planning Solicitors Near You
At Rose & Rose, we have a team of highly experienced and knowledgeable inheritance tax planning solicitors who can support you in organising your estate and pension allowances in the most efficient way, ensuring that all circumstances are considered and advising on the right solution for you and your family.
To speak to one of our private client solicitors about your estate plan or inheritance tax, please contact a member of our team below or email info@roselegal.co.uk for more information.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
