Record-breaking receipts from Inheritance Tax (IHT) boost treasury coffers.
HMRC collected £5.1bn from Inheritance Tax bills over the last 12 months, records show. This is the first time that inheritance tax bills have broken through the £5bn barrier within a single year.
Why are Inheritance Tax bills rising?
Once the reserve of the super-rich, Inheritance Tax now draws many more into its scope. This is mainly down to the rise in property prices in the last ten years. While the average price of property, according to the property website, Rightmove, is £317,000 the IHT limit has remained at £325,000. This has drawn many more ordinary people into the Inheritance Tax bracket.
In April, the new main residence nil-rate band came into being allowing people – if they’re leaving property to a descendant – an extra £100,000 inheritance tax allowance. While this may lead to lower inheritance tax bills in the future, it has not yet had an effect on IHT receipts.
There are many ways to legally pay less IHT including gifting money when you are alive and giving money to charity however the rules are complex and there are strict limits on the amount you can gift away. A solicitor can advise you on your best way to reduce your inheritance tax burden and ensure you leave a legacy for your heirs.