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Britons Waste Almost GBP2bn On Unnecessary IHT Payments

by Robert Lee, Tax-News.com, London

16 December 2008


UK taxpayers are wasting millions of pounds due to poor inheritance tax (IHT) planning, according to annual research by Unbiased.co.uk, the website promoting the benefits of independent financial advice.

The research shows that the overall amount of unnecessary inheritance tax payments totaled GBP1.9bn last year. The amount of wasted IHT payments has risen by 24% compared to the previous year, 2007, equalling an increase of nearly GBP370m.

Lack of IHT provision represents the biggest tax wastage in the UK; according to the research, Britons lost a total of GBP9.3bn in tax wastage last year. And, despite the housing market crisis, this trend looks set to continue, with more properties now valued at more than the current IHT nil rate threshold of GBP312,000 than ever before, according to the report.

The research shows that the main cause 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.

The 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 the television license fee. Despite this dislike, four in five people (82%) in the UK admit to not having taken any steps over the last twelve months to reduce their tax burden.

David Elms, Chief Executive of Unbiased.co.uk, commented: “Our research shows that people are throwing away a whopping amount of money on unnecessary inheritance tax payments. IHT liability is paid by beneficiaries, often at a time when they are grieving over the loss of a loved one. Without advanced tax planning, increasing amounts of IHT will fall into the hands of the tax man."


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