Britons waste 1.24 billion in unnecessary inheritance tax
Make a will or your heirs will foot the bill, says IFA Promotion
People in the UK are paying 1.24 billion more in inheritance tax than they have to, according to research* from IFA Promotion, the organisation promoting the benefits of independent financial advice.
"Much of this is tax that could easily be avoided with a little financial planning to ensure that your will reflects your current wishes," said David Elms of IFA Promotion. "Alarmingly, the investigation found that two-thirds of UK adults have made no will at all. At best this can significantly slow down the distribution of assets, at worst it can mean assets not reaching those who you would want to receive them."
The research shows that this year alone more than 257,000 estates will be notified for probate** with assets totaling more than 30 billion - of this 1.8 billion will go to the taxman. Contributing substantially to this sum are the 54,110 people who have died 'intestate' with estates worth more than 5,000, having made no provision for the division of their estates among family, friends or favourite charities. In many cases this means that those closest to the deceased person may receive nothing - worse still, if the state cannot trace anyone to inherit, then the taxman gets the lot.
Elms points out, "With soaring property values, especially in the South East of England, many people will find that their assets exceed the 242,000 threshold for inheritance tax. The message is simple: inheritance planning is not just for the rich. If you want to make sure that your assets reach the people or charities you want them to go to, you need to plan your inheritance."
There are a number of ways to beat Inheritance Tax, and an independent financial adviser can explain clearly which ones would apply to you, for example:
- Inheritance by a spouse is not taxed.
- Anyone can give away 3,000 to an individual each year without it being added back to the value of the estate on death, as well as 250 to any number of people.
- Wedding gifts are also allowable to a certain limit if there is a relationship to one of the couple.
- Gifts of any size are potentially exempt if the donor survives for seven years or more.
Elms concluded: "If you're planning how to leave your assets, help from an independent financial adviser could save your estate - and your heirs - a great deal of money."
For details of local IFAs or to request a free copy of IFA Promotion's guide to inheritance planning, call the hotline on 0800 085 3250 or visit the website at www.unbiased.co.uk.
* Wasted Tax 2001 conducted by independent research agency, RAKM, for IFA Promotion
** Usually those holding assets of more than 5,000 in a bank or building society, stocks and shares, property or land
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For further information please contact:
| David Elms CEO IFA Promotion 020 7833 3131 | or | Richard Winder / Shellie Wells Lansons Communications 020 7490 8828 |
| For detailed enquiries on the investigation content, please contact: Paul Hersey Research Analysis and Knowledge Management (RAKM) 01737 773 497 |
Notes to Editors
1. Inheritance tax; numbers of cases, amounts and receipts, 1988/89-1997/98
Number of cases | Tax charged | Taxpayers numbers | Tax receipts | |
1988/89 | 21,504 | 1,052.5 | 23,000 24,000 21,000 19,000 18,000 21,000 21,000 22,000 15,000 17,000 19,000 21,000* 23,000* 23,000 | 1,071 |
* provisional
Source: Inland Revenue/RAKM for IFA Promotion
2. Independent Financial Adviser Promotion
Independent Financial Adviser Promotion Ltd. was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents nearly 10,000 firms of independent financial advisers across the UK and is sponsored by 32 leading financial institutions.
IFA Promotion's central belief is:
"Consumers have a right to financial advice that is independent of the providers of financial products - i.e. independent financial advice."
3. Independent Financial Adviser Promotion's sponsors| AXA Sun Life Barclays Global Investors Funds BUPA Canada Life Clerical Medical Investment Group Dresdner RCM Funds (UK) Ltd. Eagle Star Family Assurance Friendly Society Ltd Friends Provident INVESCO Fund Managers Ltd Investec Asset Management Legal & General Merrill Lynch Investment Managers National Mutual National Savings Norwich Union Life | NPI |