Britons still not waking up to IHT alarm bells

Alarming numbers of Britons are continuing to ignore high-profile media campaigns urging them to mitigate against Inheritance Tax (IHT), a blunder that could result in their grieving families receiving a hefty upfront bill from the taxman when they try to claim their inheritance.

Death and taxes may be the only two certainties in life but research conducted by ICM Research on behalf of Bradford & Bingley found that nearly two thirds of Britons (61%) are still failing to take advice about how best to minimise their Inheritance Tax (IHT) liabilities. Six out of 10 Britons between the ages of 35 and 50 haven't even made a will, despite the predicament this could leave their dependents in if they were to die unexpectedly, with two-thirds of them (64%) admitting that they just haven't got round to it.

And because IHT must nearly always be paid upfront before an estate is released, the 28% of Britons who wrongly believe that they would be able to pay an IHT bill by simply deducting it from their inheritance could be in for another nasty shock.

More people than ever are liable for IHT yet many underestimate their wealth The widespread failure to seek advice on IHT planning ironically comes at a time when higher property prices means greater numbers of people than ever are finding themselves liable for the 40% tax due on everything owned over and above £300,000. With the average UK property now worth £218,479, more and more estates are hurtling towards the £300,000 IHT threshold once the value of other assets such as savings, life cover, shares, jewellery and cars is included within the estate.

Despite this, only 32% of Britons believe their estate would be liable for IHT, suggesting that a significant number are underestimating their personal wealth and their future beneficiaries' liability for IHT.

The research also highlighted some of the prevalent misconceptions surrounding IHT. It found that a third of people (33%) didn't know that items or assets covered in a will are liable to IHT and only 52% could correctly identify the current rate of IHT as 40%, although this rose to 71% for Britons earning more than £55,000. Of those who haven't taken advice to plan their estate, more than one in 10 (12%) said this was because they had already written a will, although the reality is that having a will has little bearing on minimising a person's IHT liabilities.

Men fare better than women on the inheritance front. When it comes to receiving an inheritance, the survey found that men are typically left better off than women, with almost twice as many men (23%) as women (14%) having inherited items and assets worth upwards of £50,001 in the past. The research also found that men were more likely to be planning to leave an inheritance of greater value than the IHT threshold of £300,000 (36%) than women (20%).

Men and women's differing attitudes towards death were also revealed by the research, which found that nearly twice as many women (14%) as men (8%) haven't made a will because they don't want to have to think about death.

Andrew Stead, head of wealth at Bradford & Bingley, said: "Despite the avalanche of column inches in recent years on the importance of planning for IHT, too many Britons are burying their heads in the sand and failing to take advice about how best to plan their estate. This could mean 40% of everything owned over and above £300,000 bypassing loved ones on their death and instead going straight to the Inland Revenue.

"While it's no surprise that planning for death is not at the top of most Britons' to-do list, by seeking advice about how to mitigate against IHT and planning their finances in a tax-efficient way, people can protect their hard-earned assets and protect their families from the burden of financial uncertainty in the future."