New statistics reveal growing burden of inheritance tax


Inheritance tax receipts in the last financial year rose to £7.5 billion, an increase of 40% on five years ago, according to figures issued by the Office for National Statistics on 23 April.

A key factor in the growing tax receipts is the tax-free threshold, which has been frozen at £325,000 since April 2009. The current stance of HM Revenue & Customs (HMRC) is that this threshold will remain in force until at least 5 April 2028.

The standard rate of inheritance tax is 40%, charged on the value of the estate above the tax-free threshold. No inheritance tax applies to anything above the threshold left to a spouse or civil partner. Of course, inheritance tax tends to hit wealthy estates hardest, but many more people are now drawn into its scope because of increases in the value of their homes.

In East Cheshire for example, the average detached house price was £263,400 in April 2009, according to HM Land Registry. Based on such a property alone, no inheritance tax would have been charged because it was below the tax-free threshold. By February 2024, the price had risen to £461,600, potentially giving rise to inheritance tax of £54,600. In Cheshire’s most expensive areas, the tax in relation to property value would typically be several hundred thousand pounds if no mitigating steps were taken.

Fortunately, this is not the full picture. A wide range of exemptions, allowances and reliefs are available to reduce inheritance tax, but early action is needed for the best outcome. At Hartey Wealth Management, we have experts who can help you navigate the complexities of estate planning in Cheshire and Shropshire.

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