New figures show that inheritance tax receipts have grown significantly over the past 12 months, reaching £5.3 billion in the year to end of February.
According to figures from HM Revenue & Customs, the 13% increase observed in IHT over the past year is a record rise, with the release of the statistics coming shortly after the suggestion of a review of the tax being put forward.
Whilst the increase in IHT has in part been attributed to the rise in property prices, the introduction of the residence nil rate band last year is anticipated to reduce the amount paid. Rising by £25,000 each year, it will eventually provide couples with an additional £350,000 allowance if they are passing on their main residence to direct descendants. However, given its gradual introduction, it will not be fully phased in until 2020/21.
Describing the inheritance tax figures as ‘alarming’ was partner at law firm Wilsons, Torsten White.
He stated: Substantial portions of individuals’ wealth are now being taken by HMRC through IHT. The value of that IHT, somewhat worryingly, continues to rise at an alarming rate.
‘No one wants their children or other dependents to have to pick up hefty inheritance tax bills, so it is important to plan ahead as early as possible how to pass wealth on to children and grandchildren.”
‘With the residence nil rate band increasing £25,000 next year, and the slowdown we are seeing in inflation, it will be interesting to see whether the tax take from IHT starts to level off in coming years.’