"Black Wednesday" for Those Without a Will

Wednesday the 6th of April 2011 has fittingly been dubbed “Black Wednesday” as it marks the beginning of the tax year that will see some of the largest budget cuts in over a century.

London, UK (Pryce Warner International) April 6th, 2011 - Last week’s budget will now come into full effect meaning income tax will rise for many, tax credits will be reduced and IHT (inheritance tax) will remain frozen. Last year’s budget cuts totaled £6bn, this year they will be £41bn and by 2015 they are estimated to be over £100bn.

The £41bn worth of austerity measures have been estimated as costing the average U.K. household £1000 this year, rising to £1560 for families with two children due to reduced child tax credits.

A further 750 000 people will now fall into the 40% income tax rate for those earning over £42 475, further damaging middle-class families income’s over the next few years.

In March 2010 it was announced that the 40% IHT rate for estates worth over £325 000 will remain frozen for the next four years. This remained unchanged in the recent budget (bar a provision offering a 36% rate for those that leave over 10% of their estate to charity). This essentially constitutes another tax increase as the IHT band will not adjust to inflation, which is rising rapidly.

Due to the rise in house prices over the past ten years and the freeze on IHT levels, more and more people will have to pay to leave money to their families despite times of severe economic hardship.

This will prove especially damaging for the estimated 30m adults in the U.K. that do not have a will prepared. In cases where no will has been prepared the tax man will typically be able to take a much larger share and one in ten people faced legal disputes in instances where no will was left behind, as well as an average £2150 legal bill.

With the severity of the austerity measures set to increase over the next few years it would be wise for those nearing retirement age to seek independent financial advice to ensure their family's long-term financial security.

David Harra, a Senior Market & Investment Analyst with Pryce Warner International, a financial services company for the expat community, commented: “While the impact of the cuts is based primarily in the U.K., it is inevitable that they will have a knock-on effect on Brits working and retiring abroad. As these cuts are set to get worse over the next few years, we would highly recommend that people seek advice on their finances and taxes to ensure all avenues for minimising the burden are explored.”

Pryce Warner International Group provide International Asset & Investment Management, Independent Financial Advice & QROPS Overseas Pensions.

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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