HMRC netted more than £3 billion in inheritance tax (IHT) payments last year, the highest amount in six years.
Official figures show that total IHT receipts rose by 8% in 2012/13 to reach around £3.147bn.
According to the Office for National Statistics, receipts had been climbing steadily up until 2007/2008, reflecting ‘increases in asset prices over this period, specifically property prices and household savings.’
The IHT tax take then fell following the onset of the economic crisis and the downturn in the housing market.
However, in a new report, HMRC states that a ‘subsequent recovery in property prices, household savings and equities has contributed to the recovery in overall tax take.’
It added that the freeze in the nil-rate band has ‘dragged more estates over the IHT threshold and potentially into paying IHT.’
The IHT nil-rate band (or tax-free threshold) has been frozen at £325,000 since 2009, and the Government has announced that it will remain at this level until at least April 2018.
Experts say this could mean that more estates will become liable to pay IHT over the coming years, as property prices begin to climb, while those already facing a tax charge could incur a larger bill.
There are a number of strategies that can help to keep your IHT liability to a minimum, such as tax-free gifts (subject to certain rules). Please contact us to discuss these and other ways to reduce the final tax bill.