£550 million set to be wasted in inheritance tax payments this year

19 May 2015

  •  Britons could save £550 million from being lost to unnecessary inheritance tax payments
  • A new Inheritance Tax Checklist from unbiased.co.uk, in partnership with Prudential, will help consumers with efficient tax planning
  • Only one in four (and half of those living in the capital) think their estate will be subject to IHT when they die

The 2015 TaxAction Report from unbiased.co.uk, in partnership with Prudential, suggests as much as £550 million1 could be wasted in inheritance tax (IHT) this year by individuals not taking appropriate action, such as placing life protection policies under trust. The predicted wastage is £20 million more than last year and an increase of £78 million on 2013.

Failure to put a policy under trust could reduce a £100,000 life insurance pay out by as much as £40,000 if an individual’s estate is worth more than £325,000, leaving a loved one at risk of a sizeable tax bill2.

The improving economy and rising house prices may result in more estates exceeding the current £325,000 IHT threshold. More estates could become exposed to IHT despite government proposals for a new additional allowance for family homes. To help families understand how IHT may affect them, unbiased.co.uk, in partnership with Prudential, has produced a new checklist that enables individuals to assess their own exposure and work out ways to reduce it.

The TaxAction Reportalso reveals that 16% of Britons think IHT is the least important tax to worry about. More than one in five (22%) say they have no plans to seek financial advice to help them reduce IHT. 

Les Cameron, Head of Technical at Prudential, comments:

‘Inheritance tax planning is often not at the top of people’s to do lists. Even when it comes to financial planning, often other more immediate forms of tax planning, such as income tax, can take precedence. The beneficiaries of good inheritance tax planning are of course those who will inherit your estate when you die and it can make a substantial difference to the amount they will receive. There are a number of ways to reduce your inheritance tax liability, ranging from pretty straightforward options to more complex ones. The best way to find out what you could save is to seek professional financial advice.’

Karen Barrett, chief executive of unbiased.co.uk comments:

‘Inheritance tax is incredibly emotive – 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. Remember too that liabilities can change – for instance, gifts can become taxable if you die within seven years of making them. Of course no-one knows when this will be, so it’s best to talk to an adviser as soon as possible.

‘Our new checklist will help consumers to think objectively about their estate and IHT exposure, and to prepare effectively for a meeting with a financial adviser about tax planning. To find a whole-of-market financial adviser and/or solicitor, visit www.unbiased.co.uk.’

Download the Inheritance Tax Checklist here


Notes to editors:

  1. TaxAction Report 2015 has been produced by Opinium Research on behalf of unbiased.co.uk. All figures are based on calculations done on unrounded values to guarantee accuracy; text paragraphs display rounded figures. Survey results come from an Opinium online survey, commissioned by unbiased.co.uk, of 2,003 UK adults aged 18+ carried out between 14th and 17th November 2014.
  2. Under current tax rules, life insurance policies are usually free of personal liability, however in certain circumstances the payout may be subject to inheritance tax.  A £100,000 policy that falls outside of the £325,000 threshold would be liable to 40% tax - £40,000, reducing the value of the policy to £60,000.

For more information contact:

Anna Schirmer/ Sarah Tye/Calum MacDougall, Lansons: 020 7294 3682

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Helping over one million visitors a year, unbiased.co.uk is the UK's No 1 adviser search, connecting consumers with the biggest and most versatile search for regulated and independent advisers. We match consumers and businesses to over 24,000 IFAs, financial advisers, mortgage brokers, solicitors and accountants. We make it easy to find the right advice by providing information, insights and tools to facilitate consumer choice.

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Category: Tax action Tagged: Inheritance Tax

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