Inheritance tax receipts up 14% year-on-year in 2021-22

This figure represents a 14% year-on-year rise – the biggest annual increase since 2014-15, when IHT receipts soared 22% on the previous year.

A record 23,000 individuals were required to pay IHT during 2021-22, with a further 900 estates also having to pay the tax.

The surge in IHT payments is said to be attributed to the Covid-19 pandemic, which resulted in a rise in wealth transfers and deaths leading to IHT liabilities.

It’s also linked to the surge in asset values as the pandemic eased, as well as the UK government’s move to freeze the nil rate band for IHT at £325,000 until 2026 at the earliest. The nil rate band has not been amended to account for inflation since 2008.

Estates with a minimum value of £1 million accounted for more than four-fifths (82%) of the overall IHT liability in 2021-22. Although 10,600 high-value estates were -liable for IHT, some 1,200 estates utilised inheritance tax planning measures to avoid liability.

The average IHT bill paid to the Treasury was £209,000 in 2021-22, up £30,000 in the last four years. In London, average IHT bills were somewhat inflated at a shade over £300,000 during the last tax year.

It’s never too early to start tax planning for your estate

If you want to minimise the tax paid on your estate after death, ensuring more of your hard-earned money goes into the pockets of your family’s next generation, inheritance tax planning is a must.

There are a number of steps which need to be considered as part of any IHT review. Some ideas which may applicable could be:

• identifying any assets that can be passed to the next generation by making lifetime gifts known as potentially exempt transfers
• making full use of available annual exemptions such as the annual gift allowance
• identifying any reliefs available, such as business property relief
• considering charitable gifts

A review will also consider other taxes, and any reliefs which may be applicable. To arrange a free initial consultation, please don’t hesitate to call us on 01322 553597. Alternatively, you can fill out our simple online enquiry form to get the ball rolling.

Date published 11 Aug 2022