Britons fail to understand inheritance tax

Tuesday, 19 April 2011 03:11

Britons overlook many of the ways of reducing the amount of inheritance tax that they pay, leading to it ranking as the second-highest area of tax waste in the country.

According to figures from Unbiased.co.uk, £1.3 billion is likely to be deducted needlessly from estates this year alone.

The only greater amount missed is through tax credits, where £8.5 billion goes unclaimed by people who qualify for pension benefits, working tax credits and child support.

Over a quarter of people (28 per cent) surveyed by the firm admitted they don't even know how to begin reducing their exposure to tax.

Chief executive of Unbiased.co.uk Karen Barrett says: "With the IHT threshold frozen for another three years, it is important to make sure your financial affairs are in order to protect your family and loved ones after you have gone."

Government advisory site Directgov notes the current threshold is at £325,000, with inheritance tax charged on the portion of the estate above this balance at a rate of 40 per cent.

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