Grant Thornton urges inheritance tax overhaul

FAR FEWER PEOPLE are liable to pay inheritance tax (IHT) than is commonly thought, according to Grant Thornton.

Its survey of 400 homeowners with properties valued at over £250,000 found a high level of confusion about who pays the tax, with 62% believing they were liable when in fact, just 3% of UK estates were subject to inheritance tax (IHT) in 2010/11 according to HMRC.

The firm has called for a full review of UK inheritance tax to either scrap the current system, or make significant changes to it make it simpler and fairer for future generations.

The majority of people surveyed (86%) supported introducing an exemption for the main residence.

Replacing IHT with "green taxes" (41%) was the most popular alternative to IHT. The least popular alternative was an annual tax on wealth.

Francesca Lagerberg, head of tax at Grant Thornton, said: "The results of our poll show that people are confused about the current IHT system and as a result there is a real feeling of dissatisfaction. What started off in 1986 as a straightforward system has become a complex maze of traps for the unwary and therefore people resent it."