‘Act now’ to avoid being hit by death duties
Soaring house prices and inflation are causing a growing number of people to be left with a large tax bill when a family member dies.
A new Government report shows the amount of inheritance tax (IHT) collected by HMRC could spiral by £37bn over the next five years.
The situation has been worsened by the nil rate threshold having been frozen at £325,000 since 2009 – a figure set to remain until 2026.
As a result, experts at financial advisers Whitley Stimpson are urging middle income families to examine ways of making their savings and investments more tax efficient to avoid leaving their beneficiaries with an unexpected hit on their inheritance.
Director Owen Kyffin said: “IHT was originally a tax on the wealthy, but millions of people are now being drawn into it thanks to rising inflation and the tax threshold freeze.
“Income tax has already been paid on this money and it will be taxed again at 40 per cent unless steps are taken to invest the money wisely before someone dies.”
Figures from the Office for Budget Responsibility’s economic and fiscal outlook families paid £27.2bn in IHT found between 2017 and 2021 – an amount expected to climb 36 per cent to £37bn over the next five years.
Meanwhile, inflation hit a new high in the year to February with the consumer prices index rising by 6.2 per cent.
Owen says families should seek advice to ensure their tax liabilities are managed efficiently.
He added: “There has been a significant increase in private clients, particularly those with property and investment portfolios seeking IHT advice recently. The pandemic has brought planning ahead to the forefront and has given people time to consider legacies and protecting family interests.
“Fortunately, there are still options such as setting up a family trust or ensuring more is left in a pension which is normally free of IHT. Now is the time to act before it is too late.”
More in Accountants
New R&D Tax Relief regulations could leave thousands of businesses at...
In a recent development, tens of thousands of businesses are facing the risk of missing out on crucial Research and Development (R&D) tax relief due to new pre-registration requirements.
Experts urge businesses to beware of latest VAT changes
Business owners registered for VAT are being reminded to make sure they file their returns and pay on time or face falling foul of new penalties introduced by HMRC.
Evolution and Growth for Oxfordshire’s Wellers
Simon Smith takes the helm as Managing Partner
From this author
New R&D Tax Relief regulations could leave thousands of businesses at...
In a recent development, tens of thousands of businesses are facing the risk of missing out on crucial Research and Development (R&D) tax relief due to new pre-registration requirements.
Experts urge businesses to beware of latest VAT changes
Business owners registered for VAT are being reminded to make sure they file their returns and pay on time or face falling foul of new penalties introduced by HMRC.
Warning as HMRC cracks down on R&D tax relief
Businesses are being warned that HMRC is cracking down on potentially fraudulent claims for research and development (R&D) tax relief.