Individuals in the UK pay more than double the inheritance tax of the European average.
The UK’s inheritance tax (IHT) rate is more than double the European Union’s average, according to analysis by UHY International, an international accountancy network.
The report looked at how much an individual passing on a estate worth £2.4 million would pay around the world.
Individuals passing on a residential property worth £2.4 million in the UK would, on average, pay just over £560,000 in tax, representing 23.9% of their estate. In contrast, on an estate of the same monetary value, individuals in the EU pay on average just 10.3% in inheritance tax, double what the UK pays. The G7 average on the same size estate is slightly higher, at 13.6%.
When compared globally, the UK’s inheritance tax rate looks even higher. For example, UHY says that individuals in the UK pay 26 times more in inheritance tax than those in emerging markets on a £2.4 million estate. Individuals in emerging markets pay over average just 0.9%. The global average for a £2.4 million estate sits at 6.6%.
Individuals in a host of countries, including Portugal, Australia, China, New Zealand, and the United States, would pay zero inheritance tax on an estate worth £2.4 million.
Several countries, however, still levy a higher tax on individuals passing on £2.4 million. Japanese individuals are liable to pay 29.5%, while followed by Belgians (26.9%) and French citizens (25.3%).
Mark Giddens, partner at UHY Hacker Young, comments: “Wealthy individuals in the UK pay some of the biggest sums across the EU when passing on their wealth – no wonder it has been labelled as Britain’s ‘most hated tax’”.
“There will always be debate about the rights and wrongs of taxing inherited wealth, but the high rate of IHT in the UK is undoubtedly a factor for those deciding whether to invest or settle here.”
“IHT in the UK can be very complicated, and anyone with a sizeable estate will need professional guidance to navigate it. Simplifying it would be a very popular move for the government to make.”
In the UK, the IHT threshold has been static at £325,000 since 2009, which has been one of the big drivers behind IHT receipts rising to record levels.