The latest HMRC tax receipt monthly bulletin has shown that for the current financial year (April 2023 – January 2024/February 2024) inheritance tax receipts are £6.3 billion. This is £0.4 billion higher than the same time last year (a 7% increase overall).
For the financial year of 2022/2023, HMRC reported a record level of inheritance tax receipts and the current financial year is likely to be even higher based on the receipts to date.
The reason for the increase of inheritance tax receipts is due to numerous factors including the frozen inheritance tax thresholds in place and the resulting fiscal drag from these, increased asset values and individuals not taking advice on whether their estate could be re-structured for inheritance tax efficiency.
Inheritance tax is typically considered a ‘death tax’, however, it can also be payable during your lifetime on certain gifts. The main rate for inheritance tax is 40%, but there may be allowances and exemptions that can mean no inheritance tax is due or at least can be significantly reduced, for example, the nil rate band.
The nil rate band is the first £325,000 of an estate that can be passed on, without inheritance tax being payable (provided the deceased has not gifted in the 7 years prior to death). If the deceased was married or in a civil partner and their spouse or civil partner had not utilised their nil rate band on their death, the deceased may be able to benefit from their allowance too. There are further reliefs and succession planning strategies which could also be applied depending on the estate.
If you would like to discuss inheritance tax further or would like information on how we could help you in relation to inheritance tax and estate planning, please contact a member of the Private Wealth team at Rothley Law on 0330 016 9200 or email us at PWnewenquiries@rothleylaw.com