More than two thirds of wealthy people do not know their estate may be liable for an inheritance tax bill, according to Canada Life’s Annual IHT Monitor research. Among adults over the age of 45 with assets in excess of £325,000, 70% of people do not know the threshold for the standard nil rate band (£325,000), up from 61% in 2016. In addition 55% of people do not know the rate at which assets above their available nil rate band are taxed, up from 52% in 2016. As a result of this confusion, families up and down the country could potentially be faced with unexpectedly high tax bills.
The results underline the increasing revenue the Government is receiving from inheritance tax. Latest figures from Canada Life’s analysis show receipts from IHT have hit a record high, with families paying £4.84 billion of IHT in the 2016/17 tax year, double what it was just seven years earlier (£2.4 billion in the 2009/10 tax year).
Nearly two in five respondents (38%) do not think their main home is liable for inheritance tax – a large increase from under a quarter (24%) who said the same in 2016. This will come as a shock to a significant proportion of homeowners who are planning to pass their wealth on to family members. Meanwhile, under a third (32%) know the annual exemption amount they are entitled to (up to £3,000) – but an additional third (35%) currently believe they can give away more than £3,000 without being charged, bringing with it the possibility of unexpected bills.
Worryingly just four in ten are aware that the following are liable for inheritance tax as part of an estate on death: pension savings, vehicles, life insurance policies not held under trust, agricultural land, business assets and non-exempt gifts in the last seven years.