Figures published by HMRC today reveal that that the amount paid in inheritance tax (IHT) last year totalled £5.9bn – a record high for any calendar year, with receipts for April 2021 to December 2021 totalling £4.6 billion, which is £0.6 billion higher than in the same period a year earlier.
Receipts in April 2017 to May 2017 and March 2019 to April 2019 were particularly high, reflecting announcements (and subsequent delays and cancellations) of rises to probate fees in England and Wales in February 2017 and November 2018, which is likely to have caused executors to bring forward tax payments to avoid the prospective higher fees.
The lower receipts in April and May 2020, were due to a temporary issue where HMRC were unable to accept cheques for payment of IHT due to Covid-19, which was resolved, hence the peak in June 2020 receipts.
Higher receipts in October 2020, November 2020, and March to August 2021 are expected to be due to higher volumes of wealth transfers that took place during the Covid-19 pandemic, though HMRC cannot verify this until full administrative data becomes available.
Richard Kennerley, CEO of Ampla Finance, says that with IHT bills continuing to rise and, with IHT thresholds being frozen until 2026, individuals should be looking to review their wealth plans to ensure they are not left paying unnecessary high levels of tax in the years ahead.
“The amount of IHT being paid continues to soar to record levels, even up a staggering 12% on the 2020 total.
Individuals need to ensure they are making use of tall tax efficiencies to reduce their IHT bill as much as possible. With IHT rates and thresholds having been frozen until 2026, it is likely that bills will continue to increase sharply in the coming years.
For those unable to afford paying large IHT payments, there are options out there to help pay the levies. Those worried about facing a steep payment in future would be wise to seek advice now to ensure they are not left in difficulty when the payment deadline gets nearer”, said Kennerley.
Further information and statistics on IHT are available in the personal incomes statistics section on GOV.UK.