Experts are urging ordinary people to take advice to avoid falling into the inheritance tax (IHT) trap.
New HMRC figures show families have paid £1.1bn in tax in the last two months with soaring house prices and inflation making more and more estates liable for IHT.
The problem has been heightened by the nil rate threshold having been frozen at
£325,000 since 2009, with no sign of it changing until at least 2026. In 2017 the Government introduced the ‘residence nil rate band’, which now amounts to £175,000, and in most circumstances takes an individual’s IHT tax threshold up to £500,000.
Owen Kyffin, director of Whitley Stimpson chartered accountants and business advisors, said:
“Ordinary people just don’t think about this tax will affect them, so it comes as a shock to them when a family member dies, and they receive a huge bill. The Government is raking in a huge amount of revenue to refill its coffers after the impact of Covid and I am sure there won’t be any adjustments to the threshold soon.”
Careful financial planning in advance is the key to making sure IHT does not have a severe impact on the family inheritance.
The tax can be reduced by making the most of available reliefs, placing assets in trust and using lifetime gifts. Using a will and insurance policies to grant control of how the wealth is used by your heirs can also help.
“When someone dies, the last thing you need to be worrying about is how to reduce IHT. We can remove that stress in advance and work to plot the best savings and investment strategy for a family.”
For further information contact Owen Kyffin.