Number of millionaires doubles since 2001
The number of people worth in excess of £1 million has more than doubled since 2001, according to Wilsons, a private client law firm.
Figures from HMRC show that there are now some 410,000 individuals in the UK with assets worth over £1 million - an increase of 136% over the last 15 years. In 2001 just 174,000 people held more than £1 million in assets.
However despite more people enjoying greater wealth, Wilsons says more of it is being swallowed up by unnecessary tax with inheritance tax (IHT) receipts hitting an all time high of £4.6 billion in 2015/16 – an increase of 21% on the previous year.
Tim Fullerlove, a partner at Wilsons says that with this increased wealth comes a responsibility to protect it for future generations.
“Increases in residential property prices have been so dramatic in the UK, that many individuals will only be able to own their own home if they do inherit wealth from their parents or grandparents, without having large amounts of that inheritance removed by IHT.”
According to Wilsons, the easiest way to mitigate an inheritance tax liability is to give money away while you are still alive. However it says a properly drafted will is still important.
He adds: “Putting a proper will in place is important for several reasons, ensuring that assets pass to the right recipients in the right way, rather than relying on rather arbitrary default rules known as the ‘rules of intestacy’; reducing the risk litigation between potential heirs and finally to undertake legitimate tax planning so that excessive tax is not lost as that wealth is transferred.”
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
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