Official figures from HM Revenue & Customs (HMRC) show that bereaved families paid a record amount of £5.2 billion in Inheritance Tax (IHT) during the last tax year, which is a £400 million increase on the previous year.
The number of people having to pay IHT is also growing, with the latest figures showing that the tax was payable on a total of 4.2 per cent of estates in 2015/16, rising from 3.9 per cent in 2014/15 and 2.7 per cent in 2009/10.
Around one in 20 families now pays IHT, and the figure is expected to increase to one in ten in the coming decades. As former pensions minister Sir Steve Webb said, the biggest element in most people’s estates is the property that they own.
He added that, for many years, IHT limits have not kept up with house prices, which has dragged increasing numbers of people into the tax net. Even the introduction of an additional nil-rate band for families passing on a home to their children was not able to stem the growth in IHT revenues.
Meanwhile, HMRC said that the new figures also show that a rise in deaths during the winter resulted in a 22 per cent spike in Inheritance Tax receipts between 2014/15 and 2015/16.
There were an estimated 43,900 “excess deaths” in the winter of 2015, resulting in double the average annual increase in IHT for the period, according to the tax authority.
However, the most recent data does not illustrate the full impact of a new ‘residential’ nil-rate band introduced last year.
If you would like to explore your IHT planning options, speak to MD Consulting today to find out how we can help you.