Approximately one out of every 25 estates end up paying inheritance tax (IHT). However, according to recent statistics, the freeze on IHT thresholds is now bringing more bequeathed wealth into the HMRC’s sights.
Over a six-month period from April to September this year, Inheritance tax receipts have reached £3.5 billion. This figure is around £400 more than the total recorded for the same term in 2021, marking a continuing upward trend, researchers found.
Typically, Inheritance tax of 40 per cent is chargeable when a person’s assets exceed a specific threshold, after any liabilities, reliefs and exemptions have been deducted. Since April 6, 2009, the threshold has remained at £325,000 for a single person and will be frozen up to and including the tax year ending 2025 to 2026.
However, additionally, there is also a transferable main residence NRB (nil rate band) set at £175,000 that is available when a family home is passed down to children or direct descendants. Furthermore, any unused threshold can be transferred to a person’s civil partner or surviving spouse.
Researchers now believe that due to the freeze on IHT thresholds, house price increases and inflation means that more estates will be subject to the mandatory levy as the average tax bill is likely to increase to more than 266,000 this year.
UK consumers who need assistance calculating their potential IHT bill often consult financial planning services in Shropshire, Hampshire and other counties. Wealth managers not only provide aid in this area but help their clients to reduce their final bill through tax efficient strategies.
