New research has revealed that the majority of people do not understand the rules which govern Inheritance Tax (IHT) and ISAs in England and Wales.
According to a survey recently featured in Moneywise magazine, there is ‘widespread confusion’, with more than half (54 per cent) of British adults admitting they unsure whether IHT is payable on ISAs.
Furthermore, 21 per cent of adults wrongly believe that ISAs do not form part of a person’s taxable estate – and will therefore never attract IHT.
Following the publication of the findings, Octopus Investment – the financial services firm which commissioned the research – has said that more needs to be done by the Government in order to “educate and raise awareness” of the rules and restrictions which apply to IHT.
The comments follow Chancellor, Philip Hammond’s call for a review of IHT amid concerns that the rules governing the UK’s existing IHT regime are “particularly complex” and are leaving many Britons completely bewildered.
In England and Wales, individuals are entitled to an IHT allowance of £325,000. Any estates valued at higher than this will attract IHT at a rate of 40 per cent – but there are numerous ways individuals can mitigate their IHT liability.
For example, if a person leaves at least 10 per cent of their net estate to a charitable cause, the amount of IHT they will be charged on the remainder of their estate will be reduced from 40 per cent to just 36 per cent.
At Moore Thompson we can help sort out your tax affairs. We will work on your behalf to ensure that your tax liability is minimised so that more of your hard-earned money stays with you, your business and, eventually, your loved ones. To find out more, please contact us.