Are inheritance tax bills on the rise? Although there is not a huge amount of people who are required to pay inheritance tax, that number could be on the rise. It appears that not everyone is safe from inheritance tax, and that might include you.
It is understandably the least popular type of tax out there even though out of all deaths in the UK, only around 4% of them tend to result in an inheritance tax bill. With such a small amount of people being sent a bill, why are there such strong views on this type of tax?
Due to the sensitive circumstance’s families likely find themselves in when facing what is often nicknamed as the “death tax,” it comes as no surprise that countless people disagree with inheritance tax altogether. After all, who wants to deal with tax complexities during such a difficult time? And many are even more disgruntled about having to hand over a slice of their loved ones hard earned fortune to the tax man over their own families. These slices can often be pretty hefty too, forcing people into heartbreaking situations that could even lead to them having to sell their family home.
It seems that while inheritance taxes have been falling over the last years, they might now be set to rise again. At the end of last year, the Office for Budget Responsibility predicted that due to the pandemic, inheritance tax bills may be going up by 20%. This is due to the unexpected number of deaths that were seen throughout the pandemic.
For some time now, the number of people who qualify to pay inheritance tax has been expected to grow. Official projections stated that between 2023 and 2024 inheritance tax would raise £6.3 billion. This outcome would be around a 20% rise from five years prior.
Figures from the Treasury show that Sunak’s move to freeze inheritance tax until 2025 or 2026 is expected to bring an extra £1 billion over the next half a decade. Despite most people not having to pay inheritance tax at all, those who do will be losing an even larger chunk than before.
In order to assess whether you may have inheritance tax liabilities you need to look at your estate as a whole. That is everything from cash and pensions to your home and possessions. Once a price has been put on your total wealth then any debts will need to be deducted from that amount, bills and owed taxes may also count towards that end figure.
Once all the equations are out of the way you should have a fairly good idea of whether or not you fall into the inheritance tax bracket. Bear in mind though that the value of your assets (especially properties and savings) will likely increase while debts should be on the decrease. So even if inheritance tax might not be such a concern today, it could very much be a pressing matter in the future.
However, the good news is that there are steps that can be taken to minimise these tax burdens by planning ahead and delving into the complicated tax system.
Join our team of Wealth Experts for one of their upcoming informative seminars so that you don’t get caught out on inheritance tax. Begin your tax planning journey so that your wealth stays in the pockets of those you love the most. Reserve your place below, or contact one of our Wealth Managers.