HMRC has collected more than £6bn in inheritance tax (IHT) in the past 12 months, the highest figure ever.
The amount of inheritance tax paid by taxpayers has jumped with HMRC collecting £6.01bn over the last 12 months compared to £5bn in the previous year.
This is the first time inheritance bills have gone over the £6bn mark.
The impact of the Covid-19 pandemic and record-high property prices alongside the frozen rate of the tax-free allowance means that the usual number of estates become liable for inheritance tax.
The single person rate has been frozen at £325,000 since April 2009. If the inheritance tax allowance had risen in line with prices, the threshold would be £439,000 today.
Hacker Young warns that in future even more estates are likely to be caught by inheritance tax. In March, Chancellor Rishi Sunak announced that both the nil rate band and residence nil rate for inheritance tax would remain frozen at existing levels until April 2026.
Inheritance tax is becoming ever more lucrative for HMRC. A tax that was originally supposed to affect only the super-rich is increasingly hitting middle England. As a result, families increasingly understand the importance of tax planning to ensure they can pass the fruits of their labour to their children.
‘The pandemic has led to record peacetime borrowing, and the Treasury will be looking to balance the books any way it can.’
Also, note that there is speculation that the Treasury will increase IHT rates in forthcoming budgets as the government looks to reduce borrowing following the pandemic.
