Omnium Wealth Management

Government income from IHT increases

Between April 2021 and January 2022, HMRC collected £5 billion from Inheritance Tax (IHT), which is up by £0.7 billion on the same period the previous year.

This represents a 13% increase and, according to HMRC, is probably in part due to more deaths because of Covid-19 resulting in higher wealth transfers.

However, HMRC said that it will not be able to verify this claim until full data is available.

Andrew Tully, Technical Director of insurance company Canada Life, said rising house prices also contributed to the growth in IHT receipts.

Another contributing factor could have been the Treasury’s freezing in March 2021 of the nil rate band and residence nil rate band thresholds at £325,000 and £175,000 respectively. This is likely to have pulled more estates into the range of IHT.

According to Shaun Moore of Quilter, the band freezes and rising house prices could lead to more estates facing a “hefty” IHT bill.

He added that the complex nature of the UK inheritance system can makes it difficult to plan for, particularly the residence nil-rate band.

Moore said:

"Perhaps now is time for a rethink of IHT to make the regime as easy to understand as possible for IHT payers."

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Talk to us about estate, retirement and IHT planning today. Give us a call on 01483 205890.


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