A large number of Britons can now expect to inherit over £1m from their parents. However, this large amount of inheritance will also make them face an enormous bill from the taxman during the process.
Last Thursday, a survey that was released suggested that one out of 25 people in the United Kingdom will be able to receive estates that have seven figures or more. And one out of 50 Britons can expect to inherit more than £5m.
Increasing property prices and stock markets have resulted in a huge rise in the wealth of the baby boomers in Britain.
However, wealth that is passed down can also lead to a huge cash flow headache for its recipients. Canada Life, a retirement planner, said that an inheritance amounting to £1m could result to a tax bill amounting to £230,000, which is almost equivalent to the price of an average house in the United Kingdom.
Karen Stacey, the head of distribution services of Canada Life, stated: “People’s expectations are likely to be substantially wrong without financial planning, and it’s quite likely they could lose substantial amounts of money in tax.
“For people expecting around £500,000 or more in inheritance, there is still a danger of losing tens of thousands of pounds in tax.”
A different report that was published at the end of the previous year concluded that millennials would be able to benefit from the largest “inheritance boom” of any post-war generation.
The Resolution Foundation, a think tank, discovered that record amounts would be left to the children of the baby boomers of Britain. However, they will have to wait until they reach the age of 61, on average.
Laura Gardiner, the senior policy analyst of Resolution, stated: “While the millennials have done far less well in accumulating their own assets, they are likely to benefit from an inheritance boom in the decades ahead.”