Nearly one in three (31%) over-55s have never checked how Inheritance Tax (IHT) could hit their life savings, according to a new study.

The study found IHT ignorance is widespread despite 36% of over-55s estimating their estates are worth more than the current tax-free allowances.

The study was carried out by TIME Investments, a provider of Inheritance Tax services.

IHT receipts received by HMRC during the tax year 2020/2021 were £5.4n, an increase of 4% (£190m) on the tax year 2019/2020.  

TIME has warned that the recent Budget decision to freeze the nil-rate and residence nil-rate bands until April 2026 is set to raise an additional £985m for the government in the next five years.

TIME Investments’ nationwide study suggests more than half (52%) of over-55s do not know what their IHT liability could be.  

Some 25% say they are aware of their potential liability while another 23% are confident they will not have any IHT to pay.

The research revealed that 36% of over-55s estimate their estate would be worth more than £325,000 – the current nil-rate band – and 20% estimate that the value is worth more than £500,000 which is the current allowance with the residence nil-rate band.

Property wealth is the biggest contributor of overall estates, the research found. Around 31% of over-55s say their house is worth more than £325,000 compared to 24% of the population as a whole. However around 28% of over-55s surveyed said they do not have a will in place.  

Henny Dovland, TIME Investments’ IHT technical specialist, said: “The Budget freeze on IHT allowances until 2026 will inevitably mean more people are likely to face tax bills and it makes sense to start planning as soon as possible.”

TIME has created an online calculator to forecast a client’s potential future IHT liability. 

• Research was conducted by market research company Consumer Intelligence among 1,019 UK adults aged 18-plus between in February.