Pictured above: John Rouse
A tax expert is urging people to plan ahead after an independent
survey revealed that UK tax payers will waste £1.3 billion
this year due to poor inheritance tax planning.
The review, carried out by professional advice service
unbiased.co.uk, showed that inheritance tax is Britain's second
biggest tax waste area -making up for ten per cent of the overall
tax wasted in the UK - beaten only by tax credits.
The research also discovered that nine out of ten people have
done nothing in the last 12 months to reduce the amount of tax they
pay.
But as John Rouse, partner in the wills trust and tax department
at Midland law firm Wright Hassall, feels this is an area where
simple steps can lead to big savings.
He said: "As this report illustrates, people tend not to plan
for inheritance tax, wasting large amounts of money as a
result.
"This tax wastage is only likely to increase as the inheritance
tax threshold will remain frozen at £325,000 until April
2014, rather than rising in line with inflation.
"Huge sums are being paid unnecessarily in taxes which could be
avoided by taking tax planning advice, leaving more available for a
person's beneficiaries on his or her death.
"One of the biggest causes of inheritance tax wastage is due to
individuals failing to write insurance policies into trust, a
process that is relatively straightforward.
"By writing a life insurance into trust means that you leave any
life insurance proceeds directly to your family or beneficiaries as
opposed to passing to them via your will resulting in the
government taking 40 per cent via tax.
"There are also other straightforward steps that can reduce your
potential tax liability, such as using your annual gift exemptions,
making an appropriate will and setting up your assets or business
in a tax efficient way.
"However people are not seeking the professional advice that
will allow them to make such savings and as long as this continues
so will the huge levels of wastage."
For more information about Wright Hassall, please visit their
website here: www.wrighthassall.co.uk