According to leading private client firm Wilsons, HMRC collected a record high of £5.3 billion through inheritance tax (IHT) last year. This figure reveals a 13% increase compared to 2016/17 which saw £4.7 billion paid in IHT.
The record sums in IHT receipts put pressure on Chancellor Phillip Hammond to follow through on plans to reform the system. A review of IHT was ordered in late January, however little information has been published regarding timescale and IHT threshold which currently remains at £325,000.
The government introduced the residence nil-rate brand (RNRB) which started being phased last April, however will not be fully phased until the 2020/21 tax year. Under the RNRB married couples or those in civil partnerships will eventually have an extra £350,000 worth of IHT-free allowance per couple. Thereafter, IHT receipts should fall. The new allowance started at £100,000 per person in the tax year 2017/18 and will rise to £125,000 in 2018/19, £150,000 in 2019/20, and £175,000 in 2020/21.
A partner at Wilsons, Torsten White stated: “no one wants their children or other dependents to have to pick up heft inheritance tax bills, so it is important to plan ahead as early as possible how to pass wealth on to children and grandchildren”. Wilsons recommends individuals seek professional advice on estate planning to ensure their estates remain as “tax-efficient as possible”.