38,500 'extra' UK households face inheritance tax bill after 'costly mistake'

UK households face inheritance tax bills from HMRC under new Labour Party government rules - after making costly mistakes. Thousands face 'higher bills' due to 'costly mistakes' that could be avoided, it is feared.

An extra 38,500 estates will now face higher tax bills due to pension inclusion within inheritance tax. More than two-fifths of UK adults have not written a will, leaving their families vulnerable to unnecessary tax complications, research has shown.

Charlene Young, AJ Bell pensions and savings expert warned: "If you die without a will, your estate will fall under the intestacy rules. This could mean a higher IHT bill and if you have no surviving relatives, the rules can even pass your wealth to the Crown."

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Ms Young added: "If you have significant assets, estate planning using trusts can also help mitigate a tax bill. Trusts and taxation are complex areas, so you should seek professional advice from a solicitor and an independent financial adviser to avoid any costly mistakes."

New research from Canada Life found that 26 per cent of people believe they don't have enough assets to warrant making a will, but this is not the case. Stacey Love, tax and estate planning specialist at Canada Life, warned: "Passing away without a will in place can place a significant burden on our loved ones. However, our research highlights that, up and down the country, people are not planning ahead or having conversations about the future."

She said: "No matter your age, writing a will should be a priority, even if you don't think you have any real wealth to pass on." Ms Young said: "Unmarried partners do not have the same rights as those in a marriage or civil partnership - even when they have lived together for many years - and under the intestacy rules, they will not inherit from you."