IHT

Inheritance Tax Receipts Up 14% for 2021-22

havenifa

havenifa


Posted on: 18th August 2022

HM Treasury has recently confirmed receipts of inheritance tax (IHT) during the 2021/22 tax year hitting a record amount of £6.1 billion.

This figure represents a year-on-year rise of 14% – the biggest annual increase since 2014/15 at the time when IHT receipts soared up to 22% on the previous year. An estimated 23,000 people were required to pay IHT during 21/22, with a further 900 estates also requiring paying the tax.

Cause

Whilst many are quick to point out what is the cause, the surge in IHT payments are attributed to the Covid-19 pandemic mostly, a term which resulted in rising wealth transfers and deaths leading to IHT liability.

It is also linked to the surge in asset values as the pandemic eased away, as well as the UK government freezing the nil rate band for IHT at £325,000 until the earliest part of 2026. The nil rate band has not been amended to account for inflation since 2008.

Using Measures

Estates that have a £1m minimum value accounted for 82% of the overall IHT liability through 2021/22. Although 10,600 higher-value estates were liable, 1,200 of them used inheritance tax planning measures to avoid the liability completely.

This has become of growing interest to many in wanting to minimise tax paid on an estate following death. Over the last few months, many people have flocked to their independent financial advisers Cheshire to ensure that more of their hard-earned money is safely passed over to the next generation – and inheritance tax planning is a huge part of that.

Applicable Options

When talking to an IFA, several steps can be considered as part of any IHT review – depending on all circumstances. There may be applicable areas where identifying any assets that can be passed as potentially exempt transfers, making use of available annual exemptions like annual gift allowance, and identifying any reliefs available such as business property relief.

Reviewing all areas will also factor in other taxes and reliefs that can apply to your circumstances. In this day and age with rising inheritance tax receipts, it plays much safer to be smart with your money and know which avenues can better protect your wealth.

For a consultation or full review of the tax planning potential of your estate, contact the team at Haven IFA today, the best independent financial advisers UK.