Inheritance tax receipts increased by more than £700 million in the last six months compared to the same period last year, the latest figures have revealed.
The report, published by HM Revenue & Customs (HMRC), reflects the greater number of “wealth transfers” that took place during the coronavirus pandemic, as well as a sustained focus on enforcement activity.
According to the research, the tax authority collected a total of £3.1 billion in inheritance tax between April and September 2021 – around 29 per cent more compared to last year’s figures.
While the hike has in large been attributed to rising deaths, the report also reveals sustained enforcement activity. In the 2020/21 tax year, HMRC launched 3,574 inheritance tax investigations resulting in an additional £254 million in tax revenue.
Commenting on the figures, a spokesperson for HMRC said: “The majority of people pay the correct inheritance tax. Investigations are opened into the small proportion of cases where compliance issues have been detected to ensure that everyone pays their fair share of tax.
“The number of inquiry cases and amount of tax we bring in each year changes as cases are opened and closed, and any tax owed is paid.”
Inheritance tax: how much do I have to pay?
With an increasing number of families under the scope of HMRC enforcement activity, paying too little inheritance tax – or indeed too much – is often a worry.
Inheritance Tax is charged at 40 per cent on the value of your estate that exceeds the Inheritance Tax threshold – currently, £325,000, or £650,000 when combined with a spouse or civil partner.
If you are passing down property, you may also benefit from the residence nil-rate band. This increases your tax-free threshold by £175,000, but only if you leave your principal home to children (including adopted, foster or stepchildren) or grandchildren.
Any unused nil-rate band can be transferred to a surviving spouse or civil partner, increasing the maximum available threshold to £1 million.
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