Tax Man Losing Out As UK Grows Wealthier

by Jason Gorringe, Tax-News.com, London

30 July 2001

Although the United Kingdom as a whole is growing richer, the Inland Revenue is losing out because people are more savvy with their money, it was revealed recently.

According to research conducted for the 'Which? Guide to Giving and Inheriting', which was released last week, household assets have risen to £4.5 trillion from £3 trillion in the early 1990s. The guide found that around a quarter of this is held in the form of property, while the rest is held in shares, life insurance, and pension plans.

As the wealth of the nation has grown, so too has the concern about finding the best way to will or donate assets without handing over a sizeable 40% chunk to the tax man. The guide reassures its readers that there are ways of substantially reducing inheritance tax, or eliminating it altogether. And this must indeed be the case, because according to Which? only around 4 in every 100 estates actually pays inheritance tax. However, it did observe that the number of taxed estates had risen to 23,000 in the year 2000-01.

Jon Carter, partner in the financial advisory firm Orchard Independent, said that people had become increasingly wary about financial matters in the wake of recent volatility, and were more open to employing financial advisors to assist them in managing their wealth. 'You don't just leave your money in a bank or building society to make money now,' he explained. 'People are a lot more aware of what they can do to increase their finances, and they are starting to take control.'

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