Inheritance Tax Confusion

by Meg King | share | tweet | connect
If you ask people if they know about Inheritance Tax, then most people will say yes. However, when you dig deeper, a recent survey by Saga found that only one in ten people knew the threshold is £325,000. Of those people 215 thought the figure was higher and 19% thought it was lower and 50% of the people just didn't know.
Inheritance Tax has known many different names in this last century alone. From 1914 to 1975 it was known as Estate Duty, from 1975 to 1986 it was called Capital Transfer Tax and in 1986 it was called Inheritance Tax and was set at £71,000. Since then it has gradually increased and when the threshold was changed in 2009 from £312,000 to £325,000 just over one in ten properties were sold above the threshold.
Since then property prices have soared and the number has become much higher over the last six years. What this actually means is that Inheritance Tax (IHT) has potentially become an issue for many more people.
Using this as context, the changes to IHT rules will benefit many people who have built up larger estates thanks to the value of their home. Some of these people may not be wealthy but living in a property hotspot.
Research carried out by Gareth Shaw, head of consumer affairs at Saga suggests widespread confusion. 42% of over 50's don't know whether their property is worth more than the IHT allowance and only 4% have taken any action to reduce the value of their estate for IHT purposes and the potential tax burden.
Meg King
Meg King is the Tax Senior at Dynamix Accountancy and can be contacted directly to ask for further advice and support.
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