The lack of awareness around inheritance tax (IHT) in the UK has increased in the last year, with half (50 percent) of liable over 45 year olds admitting to be unaware their main property could be subject to IHT.
Canada Life’s had recently covered its annual report on IHT, the proportion unaware their main property may be subject to IHT has increased sharply from a third (36 per cent) a year ago. Canada Life surveyed 1,002 UK citizens, holding assets exceeding £325,000.
The lack of knowledge extends beyond property to other assets. Over three fifths (62 per cent) do not think that their pension savings are subject to IHT, compared to 57 per cent a year ago. Two thirds (66 per cent) are not aware that agricultural land is subject to IHT, a significant increase from 57 per cent last year.
The report also found that the majority (71 per cent) of the UK population is unaware of the threshold at which they are taxed – set at £325,000. Confusion also persists around the nil rate band and the rate at which assets above the threshold are taxed (40 per cent). The percentage who do not know what this rate is has remained broadly the same year-on-year (54 per cent vs 55 per cent).
Furthermore, just one in ten (9 per cent) of over 45 year olds are aware of the rate that applies when at least 10 per cent of a person’s estate is left to charity – currently set at 36 per cent. Less than three in ten (28 per cent) know the annual exemption rate they are entitled to (up to £3,000), down from a third (32 per cent) last year.
Canada Life senior technical manager Neil Jones said: “IHT ignorance is rising at an alarming rate in the UK, and there is no indication that this will stop anytime soon.
“The lack of knowledge about the tax threshold on which assets are subject to inheritance tax has the potential to destabilise estate planning and disrupt plans for people to pass their wealth onto future generations.”
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