UK households missing out on 'two vital steps' to escape inheritance tax

Millions are missing out on "two crucial steps" which could help reduce your final inheritance tax bill from HMRC under the Labour Party government. 72 per cent of UK adults do not have a will in place, leaving nearly 40 million people at risk of intestacy rules determining their estate's distribution.

And 25 per cent believe they don't need life insurance, according to Co-op Legal Services. James Antoniou, Head of Estate Planning at Co-op Legal Services explained: "A will enables you to plan and record your wishes so that they can be legally recognised, as well as take advice from a regulated provider so that you’re making informed decisions.

"Just these two steps can significantly mitigate complications arising and potentially help the probate process to run more smoothly for your loved ones." Antoniou said: “Of course, when it comes to estate planning, the impact that our death would have on our loved ones can be a difficult subject to broach.

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“Our research suggests that a large proportion of the population have not put a legally valid will in place. However, this is an essential part of planning for the inevitable and is something that we should all take the time to do."

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "Inheritance tax is on track for another record year with receipts so far hitting £5bn. With five months of the tax year yet to go it should easily outstrip last year's £7.5bn.

"It may be a tax that so far only hits a small proportion of the population but, after last month's Budget, it's about to be an issue for a lot more people, after the decision was taken to make pensions part of someone's estate for inheritance tax purposes.

"This won't kick in until 2027 but will be a major part of many peoples financial planning."