Inheritance Tax receipts hit “record high” in 2018
Inheritance tax payments have increased by more than £1 billion since 2014/15, new figures reveal.
The report, published by HM Revenue & Customs (HMRC), shows that Inheritance Tax receipts hit a record high of £5.2 billion in 2018.
This is compared to just £3.8 billion in 2014/15.
This has been attributed, in part, to rising house prices placing a large number of estates into eligibility to pay Inheritance Tax.
This is despite the introduction of the residential nil rate band (RNRB) in 2017. Under the new relief, if someone dies on or after 6 April 2017 and their estate is above the basic Inheritance Tax threshold, the estate may be entitled to an additional threshold before any inheritance tax becomes due. To use the relief, however, the beneficiary must be a direct descendant.
The extra amount for 2018 to 2019 is up to £125,000. This is set to rise to £175,000 by 2020/21 in £25,000 increments.
Even including this additional generous relief, Inheritance Tax receipts are set to continue to rise well into the year. According to experts, the tax is estimated to raise £6.5 billion by the end of 2019, a year-on-year increase of £1.3 billion.
Commenting on the report, Catherine Desmond, an Inheritance Tax accountant, said: “Inheritance Tax can be notoriously complex to navigate, meaning some families are disadvantaged if they do not seek reliable and timely advice.
“It is vital that individuals take the necessary precautions to manage their IHT exposure and that they are fully advised and take advantage of all the allowances and reliefs available.
“Forward planning can make the difference between paying a large amount of IHT and potentially paying little or none in some cases.”
The effects of Inheritance Tax on an estate are set to be exacerbated by a reform of the fees which are charged by the Courts for processing probate applications. Presently the fee is a flat £155 for a solicitors application and £215 for a personal application. This flat fee is be replaced this April by a sliding scale based on the value of the estate with a top fee of £6000 for estates exceeding £2m. This will add quite considerably to Government coffers, especially as widows and charities who are exempt from paying Inheritance will be caught by this new fee.