Affluent residents in the south east could face unexpected tax bills on their estate because they have no awareness of the inheritance tax threshold.

The latest Trends in Wealth Report: Heir today, gone tomorrow by Close Brothers Asset Management shows nearly half of those liable for inheritance tax on their personal assets in he south east don’t know the correct threshold.

The amount paid in inheritance tax is predicted to climb by 60 per cent by 20191. With the threshold currently frozen at £325,000 and with assets such as property rising in value, the number of Britons set to fall into the threshold is forecast to double from 21,000 in 2012 to 42,000 by 2016/172.

Yet despite the importance of inheritance tax planning, knowledge of tax-saving measures is by no means uniform among those whose estates are over the threshold.

Awareness of the seven-year gift rule was the strongest, yet 18 per cent of affluent respondents in the south east were completely unaware of this legitimate exemption. There was significantly less awareness of the Business Property Relief, with 70 per cent unaware of this tax-saving measure – a greater lack of awareness than the UK average (66 per cent).

This is reflected by the number of people who have yet to address the issue of estate planning. More than a third (37 per cent) of those with assets over the threshold in the south east have not put any plans in place to protect their wealth, compared to 34 per cent across the UK.

Worryingly, almost the same amount (35 per cent) of affluent residents in the south east do not believe they need to do anything to protect their assets.

The research suggests that despite their exposure to inheritance tax, 47 per cent of the affluent respondents in the region have never sought professional advice from a lawyer, accountant or financial planner, higher than the UK average.

Moreover, 16 per cent have never discussed passing on their wealth with anyone at all, the highest level in the UK. Patrick Haines, regional head of advice at Close Brothers Asset Management, said: “When it comes to personal finances, those looking to pass on their wealth cannot let inheritance fall under the radar.

"It can only be ignored for so long. With £75bn being inherited in the UK every two years, large sums of family wealth are left unnecessarily exposed to tax.

A combination of planning inertia and a general lack of awareness is to blame, but it is crucial that those who will see their estates subject to the tax understand their liability.”

The Office for Budget Responsibility (OBR) estimates that with the inheritance tax threshold frozen at £325,000, the Treasury’s tax take will climb by 60 per cent in the next five years, climbing from an estimated £3.5bn in 2013/14 to £5.6bn in 2018/19.

Grant Thornton forecasts that the number affected by the tax will double by 2016/17, rising 21,000 last year to 42,000. l The seven-year rule allows gifts made to individuals to remain exempt from inheritance tax as long as the person lives for seven years after making the gift.