According to a report recently compiled by Grant Thornton, Inheritance Tax has become a “complex maze of traps for the unwary”. As the accountancy firm conclude that the system for Inheritance Tax continues to be overly complicated, a report has been compiled and sent to government ministers for consideration. The company believe that IHT needs to be simplified, as the significance of IHT leaves people afraid that they may not be able to leave their assets to family and loved ones.
The report compiles the results of a survey carried out on 400 homeowners who have property worth more than £250,000. Of the 400 respondents, 62 percent believed that their estate would be liable to Inheritance Tax when they died. In fact, HM Revenue & Customs official figures reveal that only three percent of estates in the UK were subject to Inheritance Tax in 2010-11.
The report proposes a number of alterations to Inheritance Tax administration, especially with regard to simplification. A large number of the respondents appeared to agree that varying tax rates for IHT would be preferable, instead of the present flat rate of 40 percent. It was suggested that the rates could be dependent on the inheritance size and the nature of relationship between payee and the deceased. Overwhelmingly, 83 percent suggested that when wealth is transferred to a partner or spouse, an exemption is given.
Other extremely popular suggestions included replacing IHT with ‘green’ taxes. An annual tax on wealth was also suggested but remained unpopular with the majority.
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