Inheritance tax hits highest level ever

As reported in the financial press, inheritance tax bills have topped nearly £5 billion a year for the first time. UK consumers are failing to make provision for inheritance tax, and it’s costing them heavily.

Inheritance tax drew £4.7bn from UK consumers in the 2016/17 tax year, and is estimated to increase by a third more over the next five years.

So why is inheritance tax rising?

HM Revenue & Customs has attributed rising IHT receipts primarily to rising asset values, with residential property making up around a third of the total value of tax paying estates.

As the average value of estates rises, an increasing number of estates are now valued over the IHT nil rate band, which has been frozen at £325,000 since April 2009.

Inheritance tax rules are notoriously complicated and although it can cost people with significant assets a sizeable sum to employ an expert to sift through their finances, it is worth it.

Tom Selby of AJ Bell commented in the FT Advisor that:

“You can’t really underestimate how difficult inheritance tax rules are. HMRC is reaping in a massive sum in tax from inheritances that could be avoided if the right measures were put in place. Yes, it may cost hundreds or thousands of pounds to get it right, but the amount you pay now will be less than that given to the tax office. You could have paid an adviser say £2,000, but if you didn’t you could end up passing HMRC more than 100 times than sum.”

For consumers, this is a major area of education. There is a lot of misunderstanding among even informed consumers about what an individual’s IHT allowance, is how allowances can be transferred and the reliefs and alternative means of obtaining such reliefs with a view to minimising IHT liability. There are a huge range of options available to clients through effective death or lifetime planning.

Managing this complex market needs much more education and new solutions to help advisers assist their clients.

Our team of experts are hosting a series of three FREE webinars so that you can provide your clients with the best advice.

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All of our Webinars are held at 10am until 11am.

The first in the series looks in detail at protecting IHT Allowances, identifying what allowances exist, Gifting, PETs and CLTs and IHT exemption.

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Friday 8th September

Monday 11th September

The next session in the series considers how Discretionary Trusts can save your clients IHT, Periodic V generational IHT, Life Assurance post death planning, Death in Service and other lump sum benefits and much more.

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Friday 6th October

Monday 9th October

The last in the series will identify how to Maximise IHT Reliefs, BPR and APR planning, NRB and RNRB planning and gifting with reservation.

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Friday 3rd November

Monday 6th November

Don’t let a lack of education and awareness mean you fail to use the variety of tools that can help reduce the burden of IHT for your clients, family and friends.

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This article was submitted to be published by Countrywide Tax & Trust Corporation as part of their advertising agreement with Today’s Wills & Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills & Probate.

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