Research suggests 70% of individuals ‘unaware of inheritance tax nil-rate band’
Research carried out by Canada Life has suggested that a significant amount of individuals ‘do not know the threshold’ for the standard inheritance tax (IHT) nil-rate band. Canada Life found that 70% of those surveyed did not know the standard nil-rate band threshold, which currently sits at £325,000.
55% of those questioned do not know the rate at which assets above their available nil-rate band are taxed, the data also revealed.
Meanwhile, an additional 38% do not believe that their main home is liable for IHT. Canada Life has warned that many families in the UK could face ‘unexpectedly high’ tax bills as a result.
‘There is a disturbing lack of knowledge which will undoubtedly translate into unnecessarily high inheritance tax bills,’ said Karen Stacey, Head of Distribution Services at Canada Life.
‘Unless people learn more about taxes and actively plan the future of their estate, the government is in line for a large, ongoing and often unnecessary windfall.’
Meanwhile, Chancellor Philip Hammond has commissioned the Office of Tax Simplification (OTS) to review the UK’s IHT regime, and make suggestions as to ways in which the tax can be simplified.
In a letter to the Chair of the OTS, the Chancellor acknowledged that the IHT regime is ‘particularly complex’, and suggested that the review focus on the technical and administrative issues surrounding the tax.
Mr Hammond also said that the review should examine how existing gifts rules interact with the IHT system, and consider whether the current rules cause taxpayers to rethink their decisions when it comes to investments and transfers.
A ‘scoping document’ for the review into IHT will be agreed and published ‘in due course’, the OTS said.
As your accountants we can help you to plan to minimise the IHT due on your estate – please contact us for further advice.