Rise in Inheritance Tax receipts represents a concerning trend
- 17th September 2021
HMRC tax receipts from April to July 2021 amounted to £2.1bn, a £500m increase on the same period in the previous year according to the latest government statistics.
There could be a number of reasons for this increase. The Covid-19 pandemic impacted HMRC’s ability to process Inheritance Tax (IHT) receipts due to being unable to accept cheques for payment of IHT, however, this was resolved in June 2020. In the government statistics, they also alluded to the fact that receipts from March to July 2021 were expected to be higher due to ‘higher volumes of wealth transfers that took place during the covid-19 pandemic’ although HMRC has stated that they cannot verify this until full administrative data becomes available.
Another possible reason for the increase could be due to the freeze on both IHT and capital gains tax (CGT) which was introduced in the 2021 spring budget and set to remain in place until 2026.
With asset prices such as housing rising at the fastest pace in over 17 years according to a report by BBC News, there is no doubt that IHT is becoming a growing concern for many.
IHT is normally applied to the value of all assets in an individual’s estate on death. This is after deducting liabilities, exemptions, and reliefs. The current rate of IHT is 40 per cent of the value of an estate above the £325,000 threshold. As stated earlier, this is frozen until 2026 so with the increase in the value of assets, you can understand why we are seeing a rise in receipts.
There are tools at hand to mitigate your IHT liability which is now more important than ever when considering estate planning.
When did you last review your estate planning and IHT liabilities?
Many people put plans in place for what will happen to their estate after they die, but how many of those people regularly review it? It is not just changes in your circumstances that should lead to a review of your plans. With the current economic climate, fiscal drag, and rising assets prices, you should review your plans now to ensure that your assets are protected and that your estate planning is fit for the future that you envisage.
Forrester Boyd Wealth Management has a team of highly qualified and experienced independent financial advisers who can help. Please do get in touch for an initial conversation about how we may be able to help.
For more information on IHT, read our guide.
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