British consistently overpay on Inheritance Tax

A new study by advice website, unbiased.co.uk, has discovered that some £2.2 billion was overpaid in inheritance taxes last year in the United Kingdom.

The amount overpaid has increased by 16% compared to 2008, according to the research. This translates as an extra £314 million overpaid over the past year.

The increase in the amount of inheritance tax unnecessarily paid is due to people failing to make the correct inheritance tax provisions before they die, claims the research.

The Chief Executive of the advice website says that making sufficient provisions, to make sure recipients only pay what they are legally obliged to, is an important aspect to consider. He says that failing to do so, "can prove an additional unwelcome stress for the deceased's family at an already difficult time, since this tax must be paid before the estate is released and any inheritance can be passed on".

The research also found that inheritance tax is the fourth most resented tax in the UK. Only fuel duty, council tax and TV licenses are more resented among the British public.

Kate Wombwell, Partner in charge of the Private Client department at Fisher Jones Greenwood Solicitors said ”making provision for Inheritance Tax should reduce your tax bill and consequently your beneficiaries will inherit more of your estate. Despite the resentment towards Inheritance tax, thousands of people don’t even think about taking advice on protecting themselves against overpayment. A combination of lifetime tax mitigation and making an Inheritance Tax friendly Will can reduce the amount of tax paid.”

It is important to seek legal advice in preparation for leaving an inheritance to limit the financial and emotional burden on recipients.