Nearly one in three (31%) over-55s have never checked how Inheritance Tax (IHT) could affect them despite 36% estimating their estates are worth more than the current tax-free allowances, new research published by TIME Investments has shown.

IHT receipts received by HMRC during the tax year 2020/2021 were £5.4bn, an increase of 4% (£190m) on the tax year 2019/2020, according to Government figures. Furthermore, the recent Budget decision to freeze both the nil-rate and residence nil-rate bands until April 2026 is estimated to raise an additional £985m in the next five years.

However, TIME Investments’ nationwide study showed more than half (52%) of over-55s do not know what their IHT liability could be. Twenty-five per cent said they are aware of their potential liability while another 23% said they are confident they won’t have any IHT to pay.

The research revealed that 36% of over-55s estimate their estate would be worth more than £325,000 – the current nil-rate band – and 20% estimate that the value is worth more than £500,000 which is the current allowance with the residence nil-rate band.

Property wealth is the biggest contributor of the overall estate, the research found. Around 31% of over-55s say their house is worth more than £325,000 compared to 24% of the population as a whole.

Around 28% of over-55s said they don’t even have a will in place.

Commenting on the study, TIME Investments’ IHT technical specialist Henny Dovland said: “Many over-55s will have estates worth more than the current IHT allowances and it is a good first step to check what impact IHT could have. The Budget freeze on IHT allowances until 2026 will inevitably mean more people are likely to face tax bills and it makes sense to start planning as soon as possible.”

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