Inheritance tax: HMRC rake in £3.2billion in four months

Inheritance tax: HMRC rake in £3.2billion in four months – tips to slash your bill HMRC amassed a staggering £3.2billion in inheritance tax (IHT) receipts from April 2023 to August 2023, which is £0.3billion higher than in the same period a year earlier. The new data, published today, comes during a period in which IHT personal allowance thresholds have been frozen until at least 2028, dragging thousands more families into the tax net as inflation and house prices rise. Laura Hayward, tax partner at wealth management growth Evelyn Partners, commented: ‘Rising IHT receipts are continuing to prove extremely lucrative for the Treasury and this doesn’t look set to change anytime soon. ‘The Chancellor has recently played down the prospect of any imminent tax cuts but, even with the current IHT charging regime remaining in place, more families are being dragged into paying IHT. ‘This is likely to be the result of allowances being frozen until at least 2028 combined with inflationary growth of asset values.’ There are several methods people can use to reduce the inheritance tax burden. Ms Hayward said the latest update from HMRC provides a ‘timely reminder’ for families that they may pay more IHT than they need to if they don’t plan ahead. She added: ‘It’s a complex area so families may wish to consider taking professional tax planning advice to help them consider the different options available to them.’ However, she noted one of the ‘best places to start in reducing or eliminating an IHT bill’ is by considering gifting to family members. Ms Hayward explained: ‘Gifts you make are generally not subject to IHT unless you die within seven years. ‘There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to IHT even if you do die within seven years.’ However, the possibility of reducing an inheritance tax bill goes beyond gifting. Ms Hayward said: ‘Other options include investing tax efficiently, business relief and setting up trusts.’ In the right circumstances, Ms Hayward said these allow assets to be ‘tax efficiently’ passed on to the next generation while ensuring they are used in a responsible way.’ Julia Peake, tax and estate planning specialist at Canada Life urged Britons not to be ‘caught out’ thinking inheritance tax won’t affect them. Ms Peake said: ‘Don’t be caught out by thinking that this won’t affect you. It’s not just the value of your home that you need to consider, it’s your whole ‘net estate’ after liabilities have been considered and reliefs have been applied, which adds up over a lifetime. Remember, if you miss the six-month deadline to pay IHT, HMRC will also start charging interest on top.’ SUBSCRIBE Invalid email We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info Trending