UK Inheritance Tax Is The Second Highest In The Developed World
The UK now has the second highest Inheritance tax (IHT) threshold in the world after Ireland compared to other major world economies. HMRC will take on average takes more than a quarter of the estate of someone worth more than £1.8m, compared with a global average of under 8 per cent.
Many other developed countries, including New Zealand and Australia have scrapped IHT altogether. The European average take on a large estate of £1.8 million ($3 million) is 14 per cent.
HMRC figures take into account the fact that the current IHT threshold of £325,000 is doubled when the deceased person has a spouse or civil partner. If not, the typical proportion of tax taken by HMRC on a large estate is 32.9 per cent.
Inheritance tax has been frozen at the same current level since April 2009 and it fully expected to remain there until April 2018. The current boom in rising house prices mean millions more estates are liable to pay the tax, under a process known as fiscal drag.
The average national house price is £250,000.and in London it rises to £409,000.
As a result of these rising prices, the taxman’s take is due to rise sharply. HMRC revenues from Inheritance Tax have risen from £2.2 billion in 2010 to £3.5 billion this year, and are due to reach £5.8 billion in 2018, according to the latest Treasury forecasts.
However Inheritance tax can be fully eliminated with sensible planning early enough depending upon a person’s overall assets. Experienced advice is essential as there are many traps for the unwary.