One in 25 Britons could face hefty IHT bills, study suggests

One in 25 Britons could face hefty IHT bills, study suggests

A new study suggests that one in every 25 Britons is expecting to inherit an estate worth £1 million or more – indicating that many families could face a hefty Inheritance Tax (IHT) bill if they do not appropriately plan ahead.

The research, which was recently highlighted in the FT Adviser, also found that one in 50 UK adults are expecting to receive an estate of more than £5 million.

Financial services firm Canada Life, which conducted the survey, said that the findings reflected the impact of the “massive” increase in wealth Britain has seen in recent years.

However, the study warned that many wealthy families might be disappointed to learn that a large portion of high-value estates will be lost to IHT unless appropriate advice is not sought at the right time.

The survey estimated that, on an estate worth £1 million, approximately £230,000 would be lost in IHT – roughly the equivalent of the cost of an average UK first-time buyer property.

Following the publication of the research, Britons are being advised to seek specialist legal advice in relation to Wills and Inheritance Tax.

In the UK, IHT is levied at a rate of 40 per cent on all estates above £325,000. However, in April last year, important changes were introduced which enable individuals to pass on an additional £100,000 in property value to their direct lineal descendants tax-free, if they seek specialist legal advice to incorporate the necessary provisions into their Will.

This is one of many ways individuals might be able to mitigate the amount of IHT they will pay.