Number of individuals worth over £1m more than doubles since 2001
7 October 2016
The number of individuals in the UK with assets worth over £1m has more than doubled since 2001, says Wilsons.
According to the latest calculations from HMRC*, there are 410,000 individuals with over £1m in assets the UK – up by 136% from 174,000, in 2001.
However Wilsons point out that record levels of this wealth are now being swallowed up, partly through poor planning, by Inheritance Tax (IHT). The amount of money taken in IHT hit an all-time high of £4.6bn in 2015-16 – up 21% from £3.8bn the year before.
Tim Fullerlove, Partner at Wilsons, says: “With this new wealth comes a responsibility to protect that wealth for future generations.”
“Putting a proper will in place is important for several reasons: ensuring that assets pass to the right recipients in the right way, rather than relying on the rather arbitrary default rules known as the ‘rules of intestacy’; reducing the risk of litigation between potential heirs and finally to undertake legitimate tax planning so that excessive tax is not lost as that wealth is transferred.”
Wilsons says that there are a number of straightforward and accepted steps which can help avoid paying unnecessary IHT. The simplest, and one that is actively encouraged by the current rules, is lifetime gifting - passing assets to loved ones during your lifetime – but a sensibly-drafted will can also be helpful.
“The number of legal disputes caused by the lack of a will or a badly drafted will are on the rise.”
“It is not uncommon for supposed beneficiaries of a will to find they are unable actually to afford inheriting what has been left to them because simple estate planning steps have not been taken.”
“Increases in residential property prices have been so dramatic in the UK that many individuals will only be able to own their own home if they do inherit wealth from their parents or grandparents without having large amounts of that inheritance removed by IHT.”
*The latest figures from HMRC are based on data relating to an analysis of estates from the years 2011-2013 that are then extrapolated for the broader population.