INHERITANCE tax bills may be higher for around half of the British population simply due to a lack of financial planning. Estates across the UK are on the verge of handing over hundreds of millions of pounds to HMRC unnecessarily.
Inheritance Tax (IHT) is generally an unpopular tax among British families and as such, many seek professional guidance on how they can best reduce or even avoid the levy. However, lack of action on this is set to cost savers millions over the coming years as more is unnecessarily paid to HMRC.
According to new research from Fidelity International, more than half (53 percent) of women are planning on leaving an inheritance, but lack of financial planning means many are at risk of paying too much IHT or not having their wishes fulfilled. The data showed out of those planning on leaving an inheritance, more than half (55 percent) of women have made no financial planning compared to 41 percent of men. Women are also more likely (37 percent) to say they don’t understand the rules around inheritance tax compared to men (25 percent).
This could prove to be especially costly as women hold more wealth than men when it comes to estates that are liable for tax, which is likely due to the fact they tend to have a higher life expectancy.
Figures from the Office for National Statistics (ONS) showed female-owned estates that are liable for tax have an overall net capital value of £13.6billion, while male-owned estates have an overall net capital value of £12.3billion.
This results in female-owned estates being liable for £430million more than male-owned estates (£2.53billion vs. £2.1billion).
Dawn Mealing, Head of Advice Policy and Development at Fidelity International, commented: “Out of those who are liable to pay IHT, women’s net estates are worth £1.3billion more than men’s. Yet, almost half have done no financial planning to make sure this wealth is gifted the way they want – something isn’t adding up.
“In general, women tend to have larger inheritances as they live longer, and therefore are more likely to inherit wealth from their partner. This leaves them facing even bigger decisions as it means they are responsible for both theirs and their partner’s wishes, and without help from an adviser they could find themselves lost.”
Unfortunately, by not having any financial. “Brinkwire Summary News”.