£1.6 billion lost in poor tax planning

Poor inheritance tax planning is set to cost UK families £1.6 billion through 2005. This is a £400 million increase in the past year alone says IFA Promotion, who issued the research.

Inheritance tax is levied on estates worth over £275,000, charging 40 per cent of anything above this amount, including any gifts made up to seven years before the deceased died.

Rising property prices mean that 3.6 million estates will become liable for the tax by 2009.

"People need to be aware that the inheritance tax threshold has failed to rise in line with soaring property prices over the last few years and that you don’t have to be rich to be subject to inheritance tax," David Elms, chief executive of IFA Promotion told My Finances.

"It's vital that people seek out advice from an independent financial adviser, so they can make informed decisions when it comes to inheritance tax planning and avoid wasting their precious inheritance unnecessarily."

To help minimise the impact of the tax on them, people are advised to hold life insurance policies in trust, plan their estate, ensure their wills are fully drawn up and that their executorship is in order.

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