A recent report by the Taxpayers’ Alliance projects that the government will receive £5.35 billion in Inheritance Tax from grieving relatives in the 2019 to 2020 tax year. This is the highest amount of Inheritance Tax ever collected in by the government and it’s predicted to keep growing.
Inheritance Tax is only one part of a deceased person’s estate and is typically imposed when the value of the estate is above the £325,000 threshold, after deducting any liabilities, exemptions and reliefs.
Thankfully, fewer than 5% of estates in the UK pay Inheritance Tax but at a rate of 40% tax it is definitely worth avoiding if possible.
However, for a homeowner living in London, with no spouse or children, who purchases a coffin and is cremated, the cost of death including Inheritance Tax could be as high as £60,773.
Paying for a funeral can be a substantial expense and the price has risen steeply over the last decade. It is now estimated that a funeral will cost £4,271 for people living in the UK. For a burial, the average funeral cost comes to approximately £4,798 and for a cremation, the cost comes in lower at £3,744.Which may explain why so many people are deciding to lock-in the price of their funeral by purchasing a pre-paid funeral plan now.
The report also highlights how the increase in house prices have had a significant effect on the cost of death. From 2009 to 2010, the average residential property price was just £164,159 for the whole of the UK and £265,249 for London. Almost 10 years later, from 2018 to 2019, the average house price increased dramatically to £229,075 in the UK and £475,297 in London.
Worryingly, although house prices have risen considerably, the Inheritance Tax threshold has remained at £325,000 since the 2009 to 2010 tax year. The frozen threshold means even more estates are brought into the Inheritance Tax net.
The cost of death is not only a time-consuming burden but can also cause worry and stress to Executors and Administrators. Putting the estate in the hands of an expert like Amba Legal Services means that the legal and financial responsibility will be taken off your shoulders and the complicated matters after death will be taken care of, giving you the time to focus on life’s important moments.
At Amba Legal Services, we strive to keep you up-to-date with the latest news in the industry. If you have any questions about estate administration, handling Inheritance Tax, or the benefits of taking out a pre-paid Funeral Plan with a bonus cash-back payment, call us now on 01299 251442.