Recent research has suggested that although 40% of people are concerned about inheritance tax 70% have taken no action to address this. The Daily Express has cited inheritance tax as being the most hated tax and there is a lot of speculation as to what may happen at the Autumn Budget.
Individuals have a tax free allowance of £325,000 (frozen until April 2026) but this is dependent upon a number of factors such as whether or not they have made any gifts or transfers into trust prior to their passing, their marital status, the make up of their estate and how they intend to distribute their estate on their death. With rising house prices it is not difficult to exceed that allowance. Various reliefs and exemptions are available however the rules for claiming them can be complicated. It is important to consider the potential inheritance tax consequences when making a Will so that assets can be left in a tax efficient way. If advice is taken early there are also steps that can be taken to reduce any potential inheritance tax liability such as utilising annual exemptions for gifts or investing in assets that attract relief.
Much like making a Will, taking advice on inheritance tax and estate planning is often something that people put off however inaction can potentially lead to problems later down the line.
The research, co-sponsored by Canada Life as part of an AKG briefing paper1, revealed that while 40% of people say they are concerned about paying inheritance tax, the majority (70%) are doing nothing to reduce a potential bill.