IHT forecast to hit a new high

New research has revealed the total amount of inheritance tax (IHT) paid to HMRC is on course to hit a record high during the 2023/24 financial year.

It follows the 17.1 per cent annual increase in the previous financial year, which researchers say was also a record.

It was also the second largest annual rise for the last 20 years, trumped only by a 22.2 per increase recorded in 2015/16, according to the study by a peer-to-peer real estate investment platform.

IHT an issue that continues to attract much media attention as the amounts collected by HMRC continue to rise.

Over the first four months of the current financial year, 2023/24, HMRC has collected £2.6bn in IHT.

If tax collection continues at this rate, the researchers at easyMoney forecast that this year’s total inheritance tax bill for the people of the UK will reach £7.8bn, breaking all previous records.

Calls continue for action to be taken on the long-frozen tax threshold. The IHT nil-rate band, which is the maximum amount a person can inherit before paying the tax, has been stuck at £325,000 since 2009 – despite rising house prices.

And the IHT gifting allowance of £3,000 a year has also remained unchanged since 1981.

Against this background it is important to start your estate planning early and to look at all the options available to you.

There are ways in which the existing IHT regime can ensure a fairer distribution of your assets through your family.

As with most tax issues the key is to get a good handle on your estate. Having and following a clear and focused strategy is also important.

The £3,000 a year annual gift allowance is good place to start. So is reviewing your will and making sure your assets will be dispersed the way you wish.

To discuss any issues around IHT or other tax issues please contact me on 01772 430000