Almost nine in 10 have no inheritance tax strategy in place, according to the Wealth and Protection Survey from Drewberry Insurance.
Inheritance tax drew £4.7bn from UK consumers in the 2016/17 tax year, and is reckoned to rise by a third more over the next five years.
Drewberry found around two in five working adults plan to leave some of their accumulated assets to friends and family but just over one in ten have not established whether there could be an inheritance tax liability.
Only 13 per cent of those surveyed admitted to doing something to establish whether there could be an inheritance tax liability while 42 per cent said it “would be nice” to see if they would end up burdening their loved ones with a tax bill.
Meanwhile 16 per cent don’t expect to have anything to pass on when they die.
Tom Conner, director of Drewberry, said the solution was straightforward. He said: “There are a host of simple planning measures that can save a fortune in inheritance tax such as getting your will in order, keeping funds IHT safe in your pension, moving your Isas to IHT-free options or just giving away your excess assets while you’ve still got at least seven more years on the clock.
“Having a will is especially important if you’re a cohabiting couple. There’s still a common misconception in this country that there’s such a thing as a ‘common law’ marriage – essentially, if you live together for long enough like a married couple you become one in the eyes of the law. This simply isn’t true.”
Three in five respondents admitted they did not realise their assets could attract inheritance tax, while 87 per cent erroneously thought their pension savings would be liable to IHT.
Other common misconceptions included the view, held by 12 per cent of those surveyed, that their housing stock would be free from IHT, while 10 per cent were sure cash and Isa savings were except from tax.
Drewberry’s research also revealed 91 per cent of cohabiting couples who wanted to leave something to their children had failed to take into account potential IHT liabilities.
Duncan Glassey, director of Edinburgh-based investment adviser Wealthflow, said: “It’s surprising how many professionals, including solicitors, who don’t consider inheritance tax, or have an up-to-date will.
“We’d always recommend reviewing inheritance issues at least every five years because things can change and none of us know when our time’s up. If you put off IHT considerations, and pass away without the required provisions, the costs will be higher for your beneficiaries.