Increase In Inheritance Tax Paid This Year

It has recently been revealed that there was an increase in the amount of Inheritance Tax paid this year. 

Inheritance Tax (or IHT, as it is commonly known) is paid on the value of the assets that a person leaves behind when they die. The current individual nil-rate band is £325,000 and allowances are frozen until 2026. If you leave anything above £325,000, the amount is liable to inheritance tax of 40%.

According to figures released by HM Revenue and Customs on 20th August this year, the receipts in July alone amounted to approximately £575 million which is a huge figure and one of the highest months in recent years. The overall increase that has been seen this year amounts to £0.5 billion when compared to the figures from 2019. As you can imagine, these receipts mean that IHT is fast-becoming a vital source of revenue for HM Treasury and it is predicted these figures will continue to rise following the decision to freeze the nil-rate band until 2026.

Whilst it has widely been assumed that this increase is largely down to the rise in wealth transfers that took place during the Covid-19 pandemic, this cannot be completely verified until further data becomes available.

Regardless, this revelation does highlight the importance of considering these factors sooner rather than later. IHT is a voluntary tax which people and families are not currently addressing. Ultimately, it is a “win win” situation for the government and we strongly advise putting plans in place for later life in order to prevent your beneficiaries from receiving a nasty tax shock.

Based in Shropshire, but also serving the wider areas of Herefordshire, Powys and Staffordshire, our dedicated and knowledgeable team offers professional inheritance tax advice to ensure that you and indeed family members (and/or everyone affected by discussions in this area) have a full understanding of what is decided and the implications of these decisions.

For more information about inheritance tax planning and advice, or if you just want to talk to someone, please feel free to contact our team today.