Inheritance Tax (IHT) receipts have been consistently rising, with new data from HM Revenue & Customs (HMRC) showing takings for the 2022–23 tax year totalled £7.1bn, up

a massive £1bn from the previous tax year (£6.1bn 2021–22). According to HMRC, this huge uplift can be attributed in part to ‘a combination of the recent rises in asset values and the government’s decision to maintain the IHT nil rate band thresholds at their

2020 to 2021 levels up to and including 2025 to 2026.’

Reported estimates from the Spring Budget detail that over the next five years, IHT is expected to bring in £38bn for the Treasury, meaning annual receipts will exceed £8bn by 2027–28, with 6.7% of deaths expected to trigger an IHT charge. This compares with 3.76% of UK deaths in 2019–20.

Record receipts have prompted suggestions that the tax has now become mainstream. Previously dubbed a tax on the wealthy, this is certainly no longer the case, as frozen thresholds and elevated house prices impact.

The good news is that through expert planning you can legitimately mitigate this tax, so you can pass on assets to your family as you’d intended. There are various different strategies depending on your unique circumstances, including making gifts during your lifetime, considering placing assets into trust, making use of exemptions, and thinking about leaving something to charity, to name but a few.

Don’t go it alone

IHT is a complex tax, with reliefs and exemptions on gifts to consider and the interaction with other taxes. These days, with many more estates likely to be subject to IHT, taking expert advice could save your beneficiaries substantial amounts of tax. Get in touch.

*The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.