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Inheritance tax mapped: 8 of the UK’s top 10 fastest-growing IHT areas are low-earning | Personal Finance | Finance

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Latest research from leading private wealth law firm Boodle Hatfield revealed a startling eight out of the ten fastest-growing areas paying inheritance tax (IHT) comprise the country’s lowest earners. The firm partly attributes this to the speed at which IHT starts to be paid having not modified for over a decade.

Inheritance tax is applied to the estate, similar to money, property and possessions, of a one who’s died and might land families with a sizeable bill to pay.

The nil-rate band, which is the utmost threshold an individual can inherit before paying IHT, has been frozen at £325,000 since 2009.

Nevertheless, while UK inflation rates rocket and house prices surge, it’s argued this threshold is now far too low and it’s hitting many households much harder.

But hit hardest of all, in accordance with Boodle Hatfield, is constituencies comprising those with annual wages much lower than the common.

READ MORE: Inheritance tax warning as marriage cuts IHT allowance in half

Boodle Hatfield’s research found Cardiff North to have seen the variety of estates responsible for IHT grow by 47 percent from 30 in 2014-15, to 44 in 2019-20, despite average wages in the realm resting 16 percent below the national average.

The typical salary in Cardiff North is £26,736, whereas the national average wage sits at £31,646.

With a median salary of £21,927, West Worcestershire has seen the variety of estates subject to IHT jump by 40 percent over the identical period, despite the fact that average wages on this area are a staggering 31 percent lower than the national average.

The remaining six constituencies of lower than average earners paying more IHT include:

  • Hemel Hempstead – £21,190
  • Daventry – £28,956
  • Chelmsford – £29,711
  • Hornchurch and Upminster – £29,694
  • Macclesfield – £30,195
  • Aylesbury – £31, 006

Kyra Motley, Partner at Boodle Hatfield, explained that with UK inflation nearly reaching 10 percent, the necessity to increase the nil-rate band is more urgent than ever.

Ms Motley said: “Over the past decade, a major proportion of the tax-free allowance on estates has been eroded because of this of a process often called ‘fiscal drag’.”

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“Extraordinary families are increasingly being faced with inheritance tax bills at a time where the associated fee of living is becoming increasingly burdensome.”

The Treasury reported having raked in a further £70 million in inheritance tax over the past yr – taking IHT revenue to an all-time high.

However the Office for National Statistics doesn’t see this trend reversing anytime soon. It predicts that by 2026-27, inheritance tax will raise as much as £7.6billion a yr.

Nevertheless, there are particular ways to spice up the IHT threshold, from optimising gift exemptions to maximising certain reliefs. Click here to read more.

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