IHT receipts hit five-year high

Families paid more inheritance tax in the last financial year than at any time since the financial downturn began, new figures have revealed.

HM Revenue and Customs (HMRC) released figures on 31 July showing that in 2012-13, inheritance tax (IHT) receipts totalled £3.14 billion, eight per cent up on 2011-12. The figure was the highest annual total since 2007-08, when it stood at £3.8 billion.

HMRC said: “Falling property prices towards the end of 2010 and the start of 2011 would have contributed to the drop in the value of estates over this time.

“Subsequent recovery in property prices, household savings and equities has contributed to the recovery in overall tax take. In addition, the freeze in the nil rate band has dragged more estates over the IHT threshold and potentially into paying IHT.”

The nil rate band has been frozen at £325,000 since April 2009 and the freeze has now been extended until 2017-18. The report also revealed that:

  • for the year 2010-11 – the latest for which certain data is available – 15,548 estates were liable to IHT, representing around three per cent of all deaths that year
  • they included 4,797 estates with assets worth £300,000 or more; 7,075 worth £500,000 or above; 2,776 valued at £1 million or more; and 937 worth £2 million or more. The average value of taxpaying estates was £906,000
  • the regions with the highest number of taxpayers and level of IHT receipts were the South East, followed by London, the South West and the East of England.

Early planning, tailored to your particular circumstances, is a key step to mitigating a future inheritance tax bill. In this specialist field, it is essential to work with an experienced professional adviser to ensure maximum tax efficiency and compliance with tax rules.

The Wills, Probate and Trusts Department at Palmers Solicitors is headed by a member of the Society of Trusts and Estates Practitioners (STEP) and staffed by sympathetic and experienced personnel, who can advise on minimising inheritance tax liabilities.

For more information on making and revising a will, please visit our website or contact one of our fee earners.