Only 22% of people aged between 55 and 64 know what their inheritance tax (IHT) liability will be on their estate when they die, new research has indicated.

A study by TIME Investments has revealed that among this 55 to 64 age group, just 8% said they have taken action to ensure they don’t pay more IHT than is necessary.

This is despite 30% estimating their estate would be worth more than £325,000 – the current nil-rate band – and almost a fifth estimating that the value is worth more than £500,000, which is the current allowance with the residence nil-rate band (RNBR).

Of those who have taken steps to minimise their IHT bill, setting up trusts where certain members of the family can receive the assets was the most popular measure, followed by use of the RNRB for homeowners and nominating beneficiaries for pensions. The study also indicated that gifting was the fourth most used rule.

Furthermore, only one in five (20%) of over-55s respondents said that they would seek advice from an expert about their IHT planning.

These findings, based on research carried out among 1,047 UK consumers in September this year, come as IHT thresholds have been frozen for a further two years until April 2028, meaning more people can expect to be caught in the IHT net.

This followed record IHT receipts of £6.1bn for the most recent tax year 2021/22, an increase of 14% on the previous year and the largest single-year increase in five years.

With the Office for Budget Responsibility (OBR) predicting that this trend will continue, Time Investments believes IHT is a major concern for many families already under pressure from the rising cost of living crisis.

IHT technical specialist at TIME Investments, Henny Dovland, commented: “The announcement that IHT thresholds will be frozen means that even more people will fall into the IHT net, yet our research shows that very few understand what their liability is, and even fewer have taken steps to ensure they don’t pay more than is necessary.

“There is a huge opportunity for professional financial advisers to help clients and potential clients in this area, which can often be complex and confusing.”

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