Figures released by HMRC today show that the Treasury raked in £6.8 billion in inheritance tax receipts in the eleven months from April 2023 to February 2024.
This is £400 million more than in the same period a year earlier.
The government’s inheritance tax take seems to be increasing thanks largely to years of house price increases, especially in London and the south-east, pushing families that probably wouldn’t consider themselves wealthy, over the inheritance tax threshold.
The revenue generated plays an important part in the government’s spending programme.
For those that are picking up the ‘death tax-tab’, Wealth Club calculations suggest the average bill could increase to £240,000 this 2023/24 tax year, with over 31,000 families having to hand over part of their inheritance to the taxman. This would be a steep 12% increase from the £214,000 average paid just three years ago and a 15% rise in the number of estates paying the tax.
Nicholas Hyett, Investment Manager at Wealth Club said, “One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases is bringing more and more into the taxman’s sights.
No one likes to pay more tax than they need to, and Inheritance Tax is among the least popular of all taxes. But with a little planning, there are a number of perfectly legitimate ways to reduce your liability – including some that should be front of mind as we approach the end of the tax year.
Gifting is a tax gift that can keep on giving.
Every tax year you can give up to £3,000 away tax free. The allowance resets every year, although if you didn’t use it last year you can combine it and pass on £6,000 this year. It’s also possible to give up to £250 each year to however many people you wish, and make wedding gifts of up to £5,000 to your child; £2,500 to your grandchild; £2,500 to your spouse or civil partner and £1,000 to anyone else.
Beyond these annual allowances, you can pass on as much as you like IHT free so long as you live for at least seven years after giving money away.”
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