Families could be missing out on millions of pounds from loved ones’ estates because people are failing to take inheritance tax planning steps, according to new research.
The 2015 TaxAction Report from unbiased.co.uk, which enables consumers to find independent professional advisers, suggests that up to £550 million could be wasted in inheritance tax (IHT) this year. The figure is £20 million more than last year and an increase of £78 million on 2013.
IHT planning steps people are failing to take include placing life protection policies under trust. By placing a policy in trust, a £100,000 life insurance pay-out could be reduced by as much as £40,000 for an estate above the IHT threshold of £325,000.
The report, produced in association with financial products provider Prudential, said that the improving economy and rising house prices could result in more estates exceeding the £325,000 threshold, despite government proposals for a new additional allowance for family homes.
Yet more than one in five (22 per cent) of the 2,003 adults questioned for the research said they had no plans to seek financial advice to help them reduce IHT.
Karen Barrett, chief executive of unbiased.co.uk, said: “People want to leave their estate to loved ones, but without tax planning you could also be passing on a hefty bill. There are several things that can be done, with the help of an adviser, to significantly reduce the bill your loved ones will face.”
Taking early, expert advice is a key step towards reducing future IHT bills and the steps involved can be as simple as giving money away, up to a £3,000 annual limit, to family members or other people you wish to benefit.
Moore Thompson’s accountants and Independent Financial Advisors can provide integrated expertise to assist in inheritance tax and estate planning to maximise IHT efficiency.
For more information on our inheritance tax planning services, please contact us.