Brits wasting £2.2 billion in inheritance tax

UK taxpayers are wasting billions of pounds due to poor IHT planning according to annual research by Unbiased.co.uk, the professional advice website. The research shows that the overall amount of unnecessary inheritance tax payments will total £2.2 billion this year. The amount of wasted IHT payments has risen by 16% per cent compared to 2008 equalling an increase of £314 million.

Lack of IHT provision represents the biggest tax wastage in the UK and despite the housing market being in crisis; this trend looks set to continue with many properties still valued at more than the current IHT nil rate threshold of £325,000. Unbiased.co.uk's research is part of its annual Tax Action campaign, which aims to encourage people to think sensibly about their tax liabilities and to take steps to avoid unnecessary tax payments. The research shows that one of the main causes of ‘death tax' wastage is the inclusion in personal estates of the proceeds of life assurance policies, which if written in trust, would not be subject to inheritance tax.

Unbiased.co.uk's research also shows that IHT is the fourth most resented tax amongst the British public, beaten to the top spot by fuel duty, council tax and TV license fee. Despite this dislike, four in five people (81 per cent) in the UK admit to not having taken any steps over the last twelve months to reduce their tax burden.

The easiest way to tackle the amount of money wasted on unnecessary tax payments is by searching for an independent financial adviser in your area who specialises in giving tax planning advice.

David Elms, Chief Executive of Unbiased.co.uk, commented; "Our research shows that extraordinary sums are being lost from estates because the deceased has not made adequate provision for inheritance tax. This can prove an additional unwelcome stress for the deceased's family at an already difficult time, since this tax must be paid before the estate is released and any inheritance can be passed on. It is crucial that people see an independent financial adviser to discuss their tax liabilities. An IFA will ensure that all advice provided is appropriate for their client's personal and family financial situation."