Wealthy Britons in the dark over inheritance tax rules
A report by Close Brothers Asset Management found that just 47% of those liable for inheritance tax on their personal assets knows the correct threshold, with 14% wrongly assuming the threshold is £500,000 or higher.
With the threshold currently frozen at £325,000 and with assets such as property rising in value, the number of Britons set to fall into the threshold is forecast to double from 21,000 in 2012 to 42,000 by 2016/17, according to accountancy firm, Grant Thornton.
Worryingly, more than a third (34%) of those with assets over the threshold have not put any plans in place to protect their wealth and almost the same amount (32%) do not believe they need to do anything to protect their assets.
The research found that despite their exposure to inheritance tax, 43% of the affluent respondents have never sought professional advice from a lawyer, accountant or financial planner and 11% have not discussed passing on their wealth with anyone at all.
Patrick Haines, regional head of advice at Close Brothers Asset Management said: “When it comes to personal finances, those looking to pass on their wealth cannot let inheritance fall under the radar. It can only be ignored for so long. With £75bn being inherited in the UK every two years, large sums of family wealth are left unnecessarily exposed to tax. A combination of planning inertia and a general lack of awareness is to blame, but it is crucial that those who will see their estates subject to the tax understand their liability.
“To ensure the smooth transfer of wealth to future generations, further education on tax saving measures and a much greater focus on early financial planning is essential. But this needn’t be a challenging process. There are professionals who can offer expert guidance on inheritance tax and can help people understand their exposure to higher taxation and the actions that could be taken to mitigate it.”