HMRC received £4.7 billion in Inheritance Tax 2015/2016
Latest figures released by the National Office of Statistics confirm that HMRC received nearly £4.7 billion pounds in Inheritance Tax (IHT) in 2015-2016. That is a huge 22% increase compared to 2014/2015. Since 2009, the amount of IHT collected has steadily increased by around 12% year on year, so last years’ increase is almost double what was expected. This has partly been attributed to increasing asset values (i.e. houses) and an increase in the number of deaths in 2015.
It is important to remember that we all have an IHT allowance (called the Nil Rate Band) of £325,000. Any assets we leave on our death up to this value will be taxed at 0%. Anything over your Nil Rate Band is taxed at 40%. Married couples can combine their Nil Rate Bands (totalling £650,000), provided certain conditions are met. With house values using the majority of these allowances, it is suspected that IHT will affect an increasing number of estates.
Through careful planning, it may be possible to reduce, or even eradicate your IHT liability. With the introduction in April 2017 of the Residence Nil Rate Band, an extra IHT allowance that can apply to main residences, now is the perfect opportunity to review your current Will and IHT planning arrangements.