Inheritance Tax receipts hit continued to trend higher than in previous years reaching £564m in May 2022, according to the latest Government figures.
Receipts for the first two months of the financial year are £1.1bn, which is £0.1bn higher than in the same period a year earlier.
With UK families set to pay £37bn in IHT over the next five years including an additional £2.5bn following revised OBR forecasts in March, Stephen Lowe, group communications director at retirement specialist Just Group, said it was vital people took steps to understand the size of their estate and the tax rules.
“While only a small proportion of people pay inheritance tax, the amount being paid has more than doubled in a decade from under £3bn to more than £6bn in 2021/22.
“One reason is that the Nil Rate Band – the size of the estate that can be left without paying any IHT – has been frozen at £325,000 since 2009. If it had risen with the general rise in prices, it would be more than £100,000 higher today.
“The monthly receipts data also shows that the phased introduction of the Residential Nil Rate Band between 2017/18 and 2020/21, an additional tax-free threshold for those leaving homes to children, has not stopped the continued rise in the amount of IHT being raised.
“Typically, the value of a residential property is the main reason why estates are pushed over the IHT thresholds and the recent house price boom across the UK means many people could be approaching or surpassing the threshold without realising.
“However, there are options available such as lifetime mortgages that can help people pass on that wealth while still alive to see the positive effect it can have on loved ones.
“Professional, regulated advice can help people across the UK work out how their property may impact their estate planning and consider how the wealth tied up in bricks and mortar can help people meet their goals in later life, whether to use that wealth to boost consumption in retirement or to bequeath it in a tax-efficient manner.”
