IHT ignorance growing, survey finds
18 February 2019
A growing number of people are seemingly unaware of the impact of inheritance tax, new data from Canada Life has shown.
According to Canada Life’s annual IHT Monitor, half of over-45s who are liable for inheritance tax are unaware that their main property may be subject to the tax. This number has risen sharply from a third (36%) a year ago.
Canada Life said the lack of knowledge also extends to other assets, with three fifths (62%) unaware that their pension savings are subject to IHT, compared to 57% of respondents surveyed last year. Two thirds (66%) were also not aware that agricultural land also comes under the scope of IHT, up from 57% reported last year.
The findings come three months after the Office for Tax Simplification called for IHT to be simplified. The main finding is the need for IHT to go digital. But while this development would benefit both advisers and their clients, more should be done to educate the wider population about the rues of inheritance tax, according to Canada Life.
The company said many individuals were unaware of the threshold at which they are taxed, while confusion also surrounded the nil rate band and the rate at which assets above the threshold are taxed.
Neil Jones, senior technical manager, Canada Life (pictured), said: “IHT ignorance is rising at an alarming rate in the UK and there is no indication that this will stop anytime soon. The lack of knowledge about the tax threshold and which assets are subject to inheritance tax has the potential to destabilise estate planning and disrupt plans for people to pass their wealth onto future generations.”
Jones said inheritance tax rules ‘have been too complicated for too long” and said more needs to be done to simplify the rules and educate the general population about the nuances.”
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