Inheritance Tax receipts rising “at an alarming rate”
The latest figures from HM Revenue & Customs (HMRC) reveal that the Treasury brought in £5.3 billion in Inheritance Tax (IHT) in the year to February 2018, sparking concerns that an increasing number of British families are finding themselves liable to pay IHT.
Under existing rules, IHT is levied on any estate valued at £325,000 or more at a rate of 40 per cent. Anything under the £325,000 threshold is tax-free – but concerns have been raised that increasing wealth and ever-rising property values are pushing more and more estates above this threshold.
In recent months, the Chancellor, Philip Hammond, has ordered the Office of Tax Simplification (OTS) to carry out a comprehensive review of IHT, amid concerns that the existing regime is too “complex.”
However, at this stage, there has been no mention of a potential increase in the £325,000 IHT threshold – which has remained frozen since 2009, despite wealth rising consistently across the country.
Nevertheless, there are still ways in which British families can mitigate their IHT liability by seeking specialist advice.
For example, the recent introduction of a new allowance known as the residence nil-rate band (RNRB) enables individuals who wish to pass on a residential property to children, grandchildren, foster children or step children in their Wills to take advantage of an additional £100,000 tax-free allowance.
This amount will rise to £125,000 in the 2018/19 financial year.
However, in order to implement the RNRB in their Wills, families need to seek specialist advice from an expert solicitor.