UK Inheritance Tax (IHT) revenues have broken the £5 billion mark, totalling a hefty £5.2 billion this year, up from a £4.7 billion last year. With an ageing population, increasing property values and fairly static allowances IHT revenues look set to grow and grow.
Within the latest government report, it was noted that the net value of estates rose by £17 billion between 2009/10 and 2015/16. Growth in the value of property is another factor contributing to the amount of money, and the proportion of every estate, landing in the hands of the tax man. At present, estates worth £325,000 or more attract IHT, although the allowance rises to £650,000 for married couples and those widowed. It is worth remembering that this ‘nil-rate system’ has remained the same since 2010, and clearly, considering the rise in IHT revenue, fails to take into account current rates of inflation.
New allowances offer some help
This is perhaps partly offset by a new allowance introduced in 2017, which allows parents an additional £125,000 allowance on the value of their estate if they are passing property onto their children. This is set to rise to £150,000 in 2019/20 and again to £175,000 in 2020/21.
Despite the allowances it is important to plan accordingly. If you would like to discuss how the IHT system can be negotiated, please do not hesitate to contact us. A copy of our Inheritance Tax Guide can be downloaded here.