A recent survey from Brewin Dolphin has found that almost a third of people in Britain are relying completely on an inheritance to fund their retirement, but are unaware that they may have to pay a 40% tax charge when they eventually receive it. Over 80% of adults believed that there would be a serious shortfall in their pension fund at retirement, and believed that a lump sum from an inheritance would improve their quality of life. But of these, 23% were not aware that inherited assets are subject to a 40% tax charge if they exceed £275,000. The research also found that most people would prefer the inheritance tax threshold to be linked to house prices. Brewin Dolphin believe that if this happened, the threshold would stand at around £500,000, given that property prices have increased by 160% since 1997.
Our view
In addition, many people are not aware that under the Community Care Act, many people will have to pay for their own social care when they are old and if they cannot afford it, given that it can cost on average around £22,000 per year, they will have a charged placed over their home. Our advice is simple, look to spend your money when you are fit. If you wish to leave money to loved ones, do it when you ae healthy and not when it is too late. Take a look at the Care Fees Adviser.com for information on care and Inheritance Adviser.com for ideas on gifting money.