Dean Statham Issues ‘Death Tax’ Warning

Following recent shock reports that a record 10 million families are to be caught up in the ‘death tax trap’, Stafford based chartered accountants Dean Statham are advising homeowners throughout the region to hurry and get their personal tax in order before it is too late.

Due to an extraordinary increase in house prices over recent years, with only minimal rises made to the amount for which inheritance tax becomes liable, more and more people could end up footing sizeable inheritance tax bills.

Susan Whiting, Partner at Dean Statham, says, ‘Currently inheritance tax is 40% on the value at death, when an individual’s estate, combining both their household and personal assets, totals over £285,000. The problem with this is that while house prices keep rising the tax threshold isn’t moving up in accordance. Therefore it is no longer just the wealthy who are feeling the brunt, but ordinary basic-rate tax payers.’

Recent research shows that around 41% of households could be liable to pay inheritance tax this year, a significant jump from the 34% estimated in 2006.

Susan adds, ‘With inheritance tax the Government has clearly identified a substantial revenue generator and is keeping the threshold low so that they can cash in. As house prices are showing little sign of slowing, the percentage of homes set to become subject to death tax is only going to rise.’

‘One way of avoiding this is to give your money away while you are still alive, as anything gifted more than seven years prior to death is not counted as part of your estate. Of course, the difficulty is ensuring you still have sufficient funds to live comfortably. People wanting to retain some income from their capital as they get older can alternatively set up a discounted gift trust or loan trust, with the help of a professional adviser. Acting now is the way to avoid bequeathing a huge portion of your loved one’s inheritance to the taxman.’