The Treasury’s Inheritance Tax take hit a new record of £4.7bn in the 2016/17 tax year and is projected to rise by a further third by 2022. Despite this, most working Britons haven’t the first idea about their potential inheritance tax liability according to Drewberry Wealth & Protection Survey 2017.
Head of Financial Planning at Drewberry
Our new Wealth & Protection Survey found that half of Brits are ‘just about managing or worse’ when it comes to their personal finances. In this environment, it’s clear that people are sacrificing savings, pensions and Life Insurance to make ends meet, yet despite this it’s clear that the average Briton is still managing to accumulate significant wealth over their lifetimes.
Director at Drewberry
In terms of expectations, those in their 40s and 50s currently expect to inherit most with 20% of these cohorts expecting to inherit over £100,000 during their lifetimes. Some 17% of under-30s expect to inherit this much, compared to only 13% of 30-somethings.
“We believe these estimates from British workers to be relatively conservative given our expectations of long-term property appreciation and stock market growth,” says Tom.
“This suggests that the record levels of inheritance now being collected by HMRC are likely to continue for some time, regardless of the new residential allowance that came into force this year.
“The point is,” stresses Tom, “that inheritance tax is no longer just for the ‘Downton Abbey Set’. The 2016/17-tax year saw 45,000 UK households hit with IHT bills and this number is set to rise even with the introduction of a new residential nil-rate band. Inevitably, many families will find it’s well worth paying out for good financial advice.”
There are a host of simple planning measures that can save a fortune in inheritance tax such as getting your Will in order, keeping funds IHT safe in your pension, moving your ISAs to IHT-free options or just giving away your excess assets while you’ve still got at least seven more years on the clock.
All can help with a potential IHT liability, so it’s worth looking into all your options.
“Essentially, anyone who keeps their head in the sand from here may as well include a cheque to the taxman when they come to write their will,” says Drewberry Director Tom Conner.
Inheritance tax is a deeply nuanced area, so to help working Britons get to grips with their potential IHT bills, Drewberry created its Inheritance Tax Calculator. This does all the heavy lifting for you and was the first online tool to include the new main residence nil-rate band introduced in 2017. Alternatively you could just get in touch – feel free to pop us a call any time on 02084327333.
Senior Paraplanner at Drewberry