Inheritance tax receipts hit record £5.36bn
1 Aug 2019
Inheritance tax receipts hit £5.36bn in 2018/19 marking a record gain for the Treasury as more estates are sucked into the IHT net
1 Aug 2019
The amount of inheritance (IHT) collected was up £164m to £5.36bn in 2018/19 from the £5.2bn collected in 2017/18. This unpopular tax continued to be a reliable revenue earner for the Treasury, with IHT receipts up 42% over the last five years from £3.8bn in 2014-15.
Total revenues were not dented by the impact of the new residence nil rate band (RNRB), a £150,000 tax-free allowance on the main residential home, which some experts predicted would reduce overall tax liability.
Since 2009-10, receipts have increased both in terms of annual revenue and as a proportion of GDP. Receipts increased substantially in 2015-16 as a result of rising asset values and a higher number of deaths in the final months of 2014-15 compared to the same period in previous years.
The numbers are in line with the steady increase in revenues from IHT since 2009/10, the first year after the introduction of the £150,000 transferable nil rate band for deaths occurring from October 2007, which increased the IHT threshold.
More estates are being dragged into the IHT net each year, as the threshold for paying the tax has not been raised from £325,000 for more than a decade. However, IHT was paid on less than five per cent of estates in 2015/16 - 24,500 - up from just 14,700 in 2009/10.
‘Taxpayers will be disappointed to see that as lower value estates come within the scope of inheritance tax, HMRC’s income from IHT has continued to rise unabated,’ said Rupert Wilkinson, partner at law firm Wilsons.
‘Barring a fall in property prices, there doesn’t seem to be any realistic prospect of a substantial reduction in the burden of this tax.
‘The growing burden of IHT on families means it is more important than ever to start estate planning as far in advance as possible. Using simple reliefs like lifetime gifts and giving income to your children when you receive it, can be effective ways of passing on some money without having to pay inheritance tax.’
IHT is an area where the government is considering reforms and a recent report from the Office of Tax Simplification (OTS) proposed a number of reforms to inheritance tax and lifetime giving to simplify over-complex rules but did not recommend a review of the overly complex RNRB rules.
Wilkinson said: ‘The Office of Tax Simplification (OTS) had a golden chance to simplify the application of the NRBs but missed it completely.’
Sara White | 31-07-2019