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NEARLY HALF OF UK HOMEOWNERS NOW PRIORITISE INHERITANCE TAX PLANNING

Reducing inheritance tax liabilities is now the number one long-term financial priority of nearly half of those with UK homes, according to one of the world’s largest independent financial advisory organisations.

A deVere Group poll reveals that in the first quarter of 2014, 48 per cent of its clients with property in Britain prioritised inheritance tax planning over retirement and education planning.

deVere Group surveyed more than 880 of its clients across the U.K., the U.S., Hong Kong, South Africa, India, the UAE, Thailand and Indonesia.

Of the poll’s findings, deVere founder and chief executive, Nigel Green, says: “The UK’s rising house prices have been headline news for several months and this, combined with a growing financial literacy, means that people are becoming more aware that if they own a UK property, they are increasingly likely to be dragged into the inheritance tax net.

Nigel Green - CEO deVere Group
Nigel Green – CEO deVere Group

“Of course, soaring house prices have been good news for many homeowners, but the flipside of this is that many more will be liable for inheritance tax.  It is now inaccurate to assume that inheritance tax (IHT) is only paid by the super rich, as it was originally intended.

“As over time millions more will be pulled into the IHT trap, it is to be expected that an increasing number of people with homes in Britain – and particularly owners of homes in London and the south east of England where prices are rising fastest – are prioritising mitigating the inheritance tax burden.”

He continues: “As the law currently stands, the threshold at which inheritance is subject to 40 per cent tax is £325,000 and £650,000 for married couples.

“But with average London house prices expected to hit that threshold this year, and with Nationwide reporting that annual house price growth in the UK has hit double digits for the first time in four years, more and more families are waking up to the fact that action is required on this important issue in order to leave as much of their legacy to their loved ones as possible – something that’s hardwired into almost all of us.

“The fact of the matter is that IHT is one of the most hated taxes.  Why? Because it is, in effect, a double form of taxation.

“It’s our experience that most people resent the idea of giving 40 per cent, over and above the threshold, of all they have acquired to the taxman after they die. After all, they’ve paid taxes on their income, savings, investments and pensions all their lives.  Not unreasonably, they want their assets to go to their heirs, not the government.”

deVere Group’s chief executive adds that like most aspects of financial planning, “the sooner you start with inheritance planning, the more options there are for you and your family.”

Amongst the options available to mitigate IHT liabilities are gifting, establishing trusts, opting for investments that qualify for relief, and holding properties as ‘tenants in common’ with a spouse.