At least two fifths of all UK estates are being forced to complete burdensome tax notification forms after the death of a loved one despite only a fraction of all UK estates being liable to pay inheritance tax.
According to recently published inheritance tax information by HM Revenue and Customs (HMRC), since 2009 at least 40% of all UK estates were forced to notify HMRC following the death of a loved one. However, between 2009 and 2017, an average of just 3.4% of all estates were liable to pay inheritance tax.
Of the 549,000 deaths in the UK in 2009/10 45.6% of all estates were asked to inform HMRC about the estate’s values and other sensitive information at an already difficult time. Of this total, only 2.7% of estates paid inheritance tax.
This trend continues all the way through to the year 2016/17 which represents the most up to date information available.
43.1% of the 567,000 deaths in 2010/11 were asked to fill in the post-death report to HMRC with only 2.7% paying inheritance tax.
A year later, 44.9% of estates completed a form to HMRC whilst only 2.9% of estates paid inheritance tax contributions.
Whilst trends are improving, too many estates are still being inconvenienced with additional, onerous and unnecessary forms. Of the 610,000 deaths in 2016/17, 40.9% were asked to inform HMRC whilst 4.6% paid inheritance tax.
A number of clear trends have emerged from the recent publication of inheritance tax information: inheritance receipts have more than doubled since the financial crash in 2009/10 and more estates are being dragged into inheritance tax liability following a steady decade of rising house prices.
In 2009/10, the Government received a mere £2.8 billion in inheritance tax receipts. However, by 2017/18, this figure had increased to £5.2 billion.
Similarly, between the UK’s financial trough in 2009 and 2016/17, inheritance tax liability increased by over 70% or 1.9% from 2.7% of all estates being liable to pay inheritance tax to 4.6% as increasing house prices dragged more estates into the liability threshold.
Should fewer estates have to complete onerous paperwork if they are not actually liable to pay inheritance tax? How could the current system be improved?
