28 July 2022
If you are covering the latest IHT statistics, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:
“The latest inheritance tax (IHT) statistics show the taxman is well and truly winning with an additional 14% added to the HMRC take compared to the previous year. IHT receipts totalled £6.1 billion in the 2021-2022 tax year, up £729 million on the year prior. This 14% increase marks the largest single-year rise in IHT receipts since the 2015-2016 tax year.
“This increased tax take shows just how big of an impact the ongoing freeze on the nil rate band and residence nil rate band has had. The freeze is certainly achieving the ‘fiscal drag’ it set out to, particularly given the rise in asset prices in the past couple of years since the depths of the pandemic. The rapid growth in house prices has no doubt played a major part in this increase, and as a result of continually rising prices, many more people could end up having to pay IHT unexpectedly.
“The total number of UK deaths that resulted in an IHT charge has also increased. In the 2019 to 2020 tax year, there were 23,000 such deaths, up 4% on the year prior. Given this data only covers to the start of the pandemic, this number is likely to have risen considerably over the past couple of years as asset prices grew and pushed more people into the IHT net.
“With many more people likely to face a hefty IHT bill in the coming years, it remains vitally important that people start to have conversations with their loved ones to fully understand their estate and the value of it sooner rather than later. While it is not always the easiest conversation to have, it is far better to have it now than during more emotionally challenging times such as following a death.
“While the entire IHT take is small change for the government compared to other forms of tax, it is growing steadily and will always be in focus when it comes to the government looking for ways to plug holes in public finances. IHT is a complicated tax and one that requires a good level of knowledge to ensure you pay the right amount. In most people’s cases that will be nothing, but with house and other asset prices still on the rise, it is worth seeking professional financial advice to ensure you understand your estate and make the most of your allowances to help mitigate your IHT bill.”
