Recent research has highlighted that the number of millionaires in the UK is rising and that there will be half a million of them by the end of this year.
Analysis of the HM Revenue & Customs (HMRC) UK personal wealth statistics showed that the number of millionaires in the UK rose by 27% during 2008 to 2013, currently standing at 409,000. If this figure continues to rise at the current rate, it is predicted that the number of millionaires in the UK could reach 495,000 by the end of this year and 585,000 by 2020.
This trend would result in a significant increase in the amount of Inheritance Tax (IHT) which high worth estates will be subject to. As a result, it is expected that an increasing number of high net worth individuals are likely to seek advice on strategies to mitigate IHT from their financial adviser.
The current IHT threshold means that individuals pay tax on estates worth £325,000 or more. From next April, the introduction of the transferrable main residence allowance (TMRA) means that this figure will potentially be increased by an extra £100,000 per person, rising to £175,000 per person in 2020. This means that married couples and civil partners could potentially pass on estates worth up £1 million to beneficiaries without incurring any Inheritance Tax charges.
Tom Curran, Chief Executive at estate administration specialist Kings Court Trust, said: “This report suggests that the substantial rise in UK millionaires is largely due to soaring property and share prices. Ultimately, this means that the number of families liable for IHT has grown significantly in recent years. However, it is important to note that many ‘ordinary’ families that have benefitted from the rise in property values will also be liable for IHT, something that they may not have considered 10-15 years ago. With the forthcoming changes to IHT legislation and the introduction of the transferrable main residence allowance next year, the landscape is likely to only become more complex for clients and advisers alike.
When it comes to the actual payment of IHT, we recommend using a specialist to ensure that all tax work is dealt with professionally. At Kings Court Trust we deal with the whole estate administration process, including IHT, on the client’s behalf. We take on full responsibility and liability so that they don’t have to worry; we also have a unique estate insurance policy which protects the family against any claims on the estate for ten years.”
For more information on Kings Court Trust’s services visit, www.kctrust.co.uk.