Wales Residents Owe Government £97 Million in Inheritance Tax

Experts advise Wales residents to take charge of their inheritance plan after discovering £97 million owed to the government in inheritance tax.

 Researchers at South Wales Wills and Probate solicitors, Devonalds Solicitors, explored recent government data which revealed the estimated number of estates still owing inheritance tax, and the estimated value of this tax.

Inheritance Tax is a tax on the estate of someone who has died, and includes their property, money, and possessions. It is estimated that 699 estates may still owe inheritance tax in Wales, amounting to an estimated £97 million.

The data highlighted the areas where the estates and values owed were highest, showing Wales owed some of the least inheritance tax of all regions in the UK:

These figures estimate that the average tax value unpaid per estate is around £138,770 in Wales. In comparison, the average value of unpaid tax per estate in the South East is around £216,433, and £300,716 in London.

Within Wales, it is revealed that Cardiff residents owe the most inheritance tax overall. The Local Authority figures, from largest to smallest, were:

When we compare the regional tats against median total household wealth by region figures between April 2018 and March 2020, these stats begin to make more sense:

• South East, £503,400
• East of England , £398,900
• South West, £379,900
• London , £340,300
• Wales, £275,700
• East Midlands, £262,800
• West Midlands , £262,400
• North West, £237,500
• Yorkshire & the Humber, £214,900
• Scotland, £214,000
• North East, £168,500

An estate will only be liable to pay Inheritance Tax if the value is over the threshold of £325,000. As such, it is somewhat little surprise that areas like Wales appear to owe the government less than their southern counterparts. After all, the median household wealth in these areas is below the £325,000 threshold.

In comparison, areas in London and the South have a median household wealth of almost double that of Wales, explaining this disparity.

Joel Evans, Partner at Devonalds, said of these figures, “Inheritance tax is charged on the value over £325,000 at a rate of 40%, so those with a household wealth of just over this may find they are unable to pay in order to claim their inheritance.

 “There are exemptions to this, for example, an additional allowance of £175,000 can be applied against property if it passes to direct descendants. Also, any part of the estate passing to a spouse/civil partner is exempt from Inheritance Tax. What’s more, those who experience a second death in a marriage/civil partnership can apply to add any part of the allowance which was unused after the first death.

 “Overall, the total allowance can be up to a £1 million in some instances. Even so, the tax can act as a significant monetary setback for beneficiaries looking to claim their inheritance. Also, the complexities of the HMRC inheritance tax forms, which can be a lot to handle whilst grieving the death of a close family member, can also compound the stress.

 “There are solutions designed to help, including IHT loans and instalment plans for those who are struggling. However, interest rates can be high on these plans, so it’s important to seek the advice of a specialist wills and probate solicitor to prepare your family for such an eventuality and explore the avenues available to you. They can also help you to complete the complex HMRC forms, relieving the stress.”

If you’re looking for help paying inheritance tax in the South Wales area, filling out IHT forms or with the administration of the estate, be sure to get in touch with the team at Devonalds by heading to their contact page.