A recent report has revealed that there is a real lack of awareness around inheritance tax (IHT) in the UK...
A recent report has revealed that there is a real lack of awareness around inheritance tax (IHT) in the UK. Canada Life’s latest edition of its annual report on IHT found that:
50% of liable over-45s were unaware their main property could be subject to IHT (this is a 36% increase compared to a year ago)
62% did not think that their pension savings are subject to IHT compared to 57% a year ago
66% are not aware that agricultural land is subject to IHT (an increase from 57% last year)
71% of the UK population is unaware of the £325,000 threshold they are taxed
The study also found that there is a lot of confusion around the nil band tax rate and the rate that applies when at least 10% of a person’s estate is left to charity.
Canada Life senior technical manager Neil Jones said:
“IHT ignorance is rising at an alarming rate in the UK, and there is no indication that this will stop anytime soon.
“The lack of knowledge about the tax threshold on which assets are subject to inheritance tax has the potential to destabilise estate planning and disrupt plans for people to pass their wealth onto future generations.”
What is Inheritance Tax?
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who has died.
Usually, an estate is exempt from paying any Inheritance Tax if the value is less than £325,000 or if everything above this threshold is left to a spouse, civil partner, a charity or a community amateur sports club.
Currently, the standard Inheritance Tax rate is 40% and is only charged on the part of the estate that’s above the threshold. However, this rate can be reduced to 36% if 10% or more of the ‘net value’ is left to charity.
IHT is paid to HM Revenue and Customs (HMRC) by the executor of a Will, typically from the funds from the estate of the deceased. The executor needs to obtain the necessary legal permission to deal with the estate – which is known as a ‘Grant of Representation’ or ‘Grant of Probate’.
Further information about IHT is available at www.gov.uk/inheritance-tax
If you would like more information or to discuss how to get probate, contact us at Get Probate on 0161 907 4044.