Between April and November 2023, HM Revenue & Customs collected £5.2 billion in inheritance tax (IHT) payments.
That’s £400 million higher than in the same period last year, according to official figures.
The IHT threshold is currently £325,000, or £650,000 for a married couple. So if your estate is worth more than this amount, you will be liable to pay IHT, with the part of the estate above the nil rate band being taxed at a rate of 40 per cent.
While many people won’t have to worry about paying this charge, as their estates will be worth less than £325,000, more and more of us are getting caught up in the IHT net, partly because of house prices soaring over the last few years.
As a result, the debate over whether IHT should be reformed or scrapped altogether has been gaining momentum.
Chancellor of the Exchequer Jeremy Hunt has even come under pressure from his own side to scrap IHT completely in recent months, as more than 50 Conservative MPs, part of the Conservative Growth Group, have actively called on the government to abolish it before the next general election.
This group includes former Chancellor Nadhim Zahawi, who wrote in The Telegraph that IHT is “morally wrong” and that scrapping it would show the government “backs families in their desire to pass on their hard-earned savings to the next generation”.
It was notable in the recent Autumn Statement that despite widespread speculation, Mr Hunt didn’t actually announce any changes to the IHT regime at all.
However, the Chancellor is set to deliver his Budget in March, potentially weeks before voters go to the polls in a general election.
So could the government be waiting until then to announce changes to the IHT regime that it believes could be a vote-winner?
Of course, we can’t be sure, so in the meantime, it’s well worth actively taking steps to reduce your IHT liability where possible.
IHT is a complex area of taxation, so if you’re keen to reduce your liability and ensure more of your money goes to your chosen beneficiaries, you should consult with a professional financial planner.
A specialist in this area can advise you what steps to take, and help you move forward safe in the knowledge that you’ll be leaving the maximum amount possible to your loved ones.
If you have any questions about managing your estate and mitigating the impact of IHT, please don’t hesitate to get in touch with us, and we’ll be happy to speak with you.