Latest figures from HMRC, have revealed a £0.6bn increase in inheritance tax (IHT) receipts in the first half of this tax year (21/22), compared to the previous tax year.
The article in Professional Adviser went on to state that 3.6bn collected was between April and October 2021, this represents a whopping a 20% increase on the same period a year earlier.
HMRC said higher receipts were expected in October 2020, November 2020, and from March to August 2021- this is due to higher volumes of wealth transfers that took place during the Covid-19 pandemic.
One of the main reasons for the large increases in IHT tax receipts is the big increase in property prices.
The stamp duty holiday played a big part in driving these increases.
Recent budgets have also not been kind to inheritance tax, as the current thresholds have been frozen.
Due to the large rises in property prices more families than ever are now caught in the IHT tax trap.
The current rules mean that you can pass on £175,000 of your property tax-free, which is effectively doubled to £350,000 when combined with the allowance of your spouse or civil partner.
That’s in addition to your personal inheritance tax allowance – or nil rate band – of £325,000, meaning it is possible to pass on to your beneficiaries £1m of inheritance tax free, as a couple.
Seek Expert Advice
We would strongly recommend that you should carefully consider your tax planning and make the most of current allowances.
There are options you could consider that may reduce any potential inheritance tax burden.
You can consider making gifts and investing tax-efficiently and there are several areas of tax planning that also may help reduce an IHT bill.
We have been providing holistic financial advice, including legacy and inheritance tax planning to our clients for over 30 years.
Our mission is to help our clients make better decisions with their money and live their best lives.
If you would like an initial chat about how we could help you with your legacy planning and ensure as much of your wealth gets passed on to the next generation, please get in touch.