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Increasing the interest on inheritance tax (IHT) payments is not likely to cause problems for those handling the estates of family members or friends, according to the director of an independent financial advice firm.

Alex Pegley of Calculis asserted that the increase to three per cent interest on delayed payments from September onwards "shouldn't ruffle any feathers".

HM Revenue & Customs notes that IHT is charged on estates worth more than £325,000. Anything above this threshold is taxed at a rate of 40 per cent.

But some campaigners have labelled the government move as desperate and have criticised the increase as confirmation of the government's dependence on the tax system.

Earlier this year, research conducted by Norwich Union indicated that 21 per cent of people who are likely to have to pay IHT do not know that they will have to pay.

The study found that many people are leaving estate planning too late, as 40 per cent of people between the ages of 50 and 64 are waiting until they are "a little older".

But people who are planning their retirement - usually those between the ages of 55 and 65 - should also set about planning their estate at the same time, according to advisers.

19/08/2009 10:29