More estates hit inheritance tax threshold

A recent study has revealed that amongst the world’s major economies, European countries tend to impose the highest rates of inheritance tax. The study also shows that the countries with the highest rates of inheritance tax overall are the UK and Ireland.

The report, by international accountancy network UHY, quotes the example of an individual leaving behind an estate worth US$3 million. In Ireland, the inheritance tax that was due would amount to around 26% on average, while in the UK it would be around 25.8%. This is comparable to a global average of only 7.67%, and a European average of 14%.

According to UHY, inheritance tax thresholds are of particular concern to middle class families, because if the threshold remains frozen for a period of time and does not rise with inflation, the value of their estates will increasingly fall within the threshold.

In the UK, the threshold has remained frozen at £325,000 since 2009. As a result, the recent increases in property prices mean that estates which contain property are increasingly likely to be valued over the threshold. This is a particular concern given that the average value of a home in the UK is now £250,000.

David Cameron recently hinted that he would like to raise the threshold to £1 million, although there are currently no definite plans to do so.

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