New insight has revealed that despite an increase in inheritance tax thresholds over the last 20 years, higher rates of house price growth mean that homebuyers across 36 per cent all UK local authorities are now automatically liable to pay inheritance tax based on the value of their bricks and mortar estate alone, versus just 4% two decades ago.
Sir Keir Starmer is due to deliver his government’s first Autumn Budget on 30th October, and he has already said that it is going to be ‘painful’ for many to hear. As such, new taxes and increases are expected to be announced, and changes to inheritance tax rules are widely predicted to be included.
Analysis of HMRC receipts data by Yopa shows that the government has already been benefitting from a notable increase in the level of inheritance tax it receives.
4% of homebuyers hit with inheritance tax 20 years ago
20 years ago. The analysis shows that at this time (2004 to 2005 financial year), HMRC collected £2.9bn per year in inheritance tax receipts. Yopa’s National Franchise Director, Steve Anderson, commented:
“It’s not just the archaic tax grab of stamp duty land tax where the government has benefited due to escalating house prices over the last two decades, with the sums gained from inheritance tax also climbing consistently in line with increasing property values.
It now looks as though this tax take could potentially increase even further as we head towards an Autumn Budget that is being positioned as a ‘painful’ one for UK taxpayers.
As it stands, the only official statement concerning inheritance tax from the Labour manifesto focusses around ending the use of offshore trusts to avoid inheritance tax, which would mean that the average homeowner has little to worry about.
However, doing so would likely require a hefty rewrite of inheritance tax legislation and so we can’t be sure what might materialise from this until the ink has dried.
Regardless, we’ve seen house prices continue to stabilise so far this year and this means that many more homeowners could be pulled into inheritance tax thresholds as house prices continue to increase – even without any changes being made to current legislation.”
