The latest figures from HM Revenue & Customs (HMRC) reveal a significant increase in Inheritance Tax (IHT) receipts. In the first two months of the 2023/24 financial year, the Treasury collected £1.2 billion – marking a 13 per cent increase from the £1.1 billion raised during the same period last year.
These figures underscore the growing impact of IHT on individuals and families, and the increasing importance of careful tax and estate planning, alongside the preparation of a Will.
The Office for Budget Responsibility (OBR) forecasts suggest that IHT will raise £7.2 billion this financial year and as much as £8.4 billion by 2027/28.
The rise in IHT receipts is largely attributed to the continually frozen nil-rate bands, which have not been adjusted to keep pace with inflation and the rise in property values.
As a result, more and more estates are falling into the IHT net, leading to higher tax receipts.
This situation emphasises the importance of understanding the IHT rules and planning your estate accordingly.
IHT planning is not just about minimising the tax payable. It is also about ensuring that your wealth is passed on to your loved ones in the most efficient way possible.
This involves understanding the various reliefs and exemptions available, such as the spouse exemption, the residence nil-rate band, and the potentially exempt transfers.
Moreover, it is about making sure that your Will is up-to-date and reflects your current wishes. It’s about considering the use of trusts to control how your assets are distributed. And it is about thinking about lifetime gifts as a way of reducing the value of your estate.
The debate around IHT continues, with some calling for its abolition. However, as long as it remains part of the tax landscape, careful planning is essential.
With the right strategies in place, it is possible to minimise the amount of IHT payable and ensure that as much of your estate as possible goes to your loved ones.
The increase in IHT receipts is a stark reminder of the tax’s impact on estates and the importance of effective planning.
As the figures continue to rise, the need for careful and strategic planning becomes ever more critical.
It is a trend that is worth watching closely in the coming years, particularly for those looking to safeguard their wealth for future generations. If you are concerned by this development, you should review your existing inheritance arrangements, including your Will. Get in touch to find out more about our services.
