While inheritance tax (IHT) accounts for only a small amount of the overall tax paid to HM Revenue & Customs – around just 1 per cent – it is a very emotive tax in that it impacts the people we care about.
Latest figures show that HMRC’s receipts of IHT have risen from £5.3 billion in 2020-2121 to £6.1 billion in 2021-22. This increase is only partly explained by Covid-related deaths.
Perhaps the most concerning increase in IHT is due to the nil rate band having been frozen until 2026. This, combined with rocketing house prices, is pushing more families into the scope of IHT.
The good news is that relatively simple planning can save a significant amount of IHT. The bad news is that simple planning undertaken without sufficient tax and legal advice can result in unintended tax consequences.