Regulation 

ONS wealth data shows need for tax planning

Its latest 10-page Inheritance in Great Britain (2008/10) report found that 10 per cent of us are inheriting more than £125,000, with properties pushing them into a 40 per cent tax rate, regardless of their own individual income and capital.

According to the ONS, 1.6m adults have received more than £1000 in the two years prior to being surveyed. The combined total of all inheritances received stands at £75bn.

This has risen mostly because of home ownership rates burgeoning from 23 per cent in 1918 to 69 per cent in 2001, the ONS found.

Key findings

3.6% of UK adults received £1000 or more in 2008 to 2010

The biggest fifth of all inheritances amounted to £57bn alone

Total inherited wealth was £75bn

50% of all inheritors received less than £10,000

Source: ONS

William Hunter, founder of national wealth adviser Hunter Wealth Management, said: “People often overlook the value of the assets they own and this can come back to bite them when they are presented with a significant tax bill.

“People’s properties are generally the asset that exposes them to tax at the 40 per cent rate and with prices rising their tax bills will only increase further.

“Tax would have been paid on a significant percentage of the £75bn inherited over the past two years and this underlines the need for people to plan well in advance for IHT.”

He said that IHT planning was often overlooked because it can be complicated but there were “numerous” ways to mitigate the amount of tax payable upon death, from life assurance trusts to gifting out of income.

With HM Revenue & Customs also cracking down on various investment schemes, Jason McGuigan, director of financial planning for Oxford-based Critchleys Financial Planning, said it was vital for people to take proper advice on which products to use.

He said: “There is always a concern that HMRC is moving the goalposts, and advisers are definitely more apprehensive about non-mainstream schemes following GAAR.

“But it also depends on what you define as a tax-efficient scheme; an Isa is technically a tax-efficient scheme. There are mainstream products that can still help clients out there.”

KEY FACTS

- 3.6% of UK adults received £1000 or more in 2008 to 2010

- The biggest fifth of all inheritances amounted to £57bn alone

- Total inherited wealth was £75bn

- 50% of all inheritors received less than £10,000

Source: ONS

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