Published on: 27th September 2021

Growing Inheritance Tax Payments

Research recently released by the financial services firm NFU Mutual has shown that in 2018/19, there were 22,100 deaths which resulted in an Inheritance Tax (IHT) bill. The average bill was £209,502 which was a 6% increase from the previous year. The trend of growing IHT bills is, in part, due to the increased prices of property coupled with the maintenance of the Nil-Rate Band (NRB) allowance at £325,000. 

To help pay for the Covid-19 bill, the NRB will be frozen at that rate until at least April 2026. Whilst, according to the Office for National Statistics, UK average house prices increased by 13.2% over the year between June 2020 and June 2021, IHT allowances are being frozen. This could cause the average IHT bill to rise even more than 6% in coming years.

London and the south of England had the highest IHT bills in 2018/19. This, again, is in line with the rising cost of property within the region. In London, for example, the average bill was £271,280. Paying these large sums can prove challenging for many families and make a significant dent in a family’s wealth.

Whilst some families are able to pay IHT bills of over £200,000 with savings, many families will struggle to do so as the largest asset tends to be a property. Inheritance Tax must be paid before a Grant of Probate is issued. The issue with this is that in many cases, families need the Grant of Probate to access cash assets or sell property. Options are limited for those who do not have liquid assets to pay the IHT bill.

The onus of payment is placed on the executors of the deceased’s Will. Inheritance Tax must be paid by the end of the sixth month after an individual passes away. If IHT is not paid within that timeframe, interest will be due.

Estate planning can be used to help minimise IHT liabilities and help prepare your loved ones for any tax that might be due. Through certain trusts and other estate planning techniques that are accepted by HMRC, we are able to minimise IHT liabilities for some clients and even allow for properties to be sold before needing a Grant of Probate. The amount of IHT savings that can be offered vary depending on our clients’ individual circumstances. 

If you are interested in discussing inheritance tax and your current estate planning options, please contact our friendly and helpful team by calling 01732 868190 or by using our online form here.

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Our Covid-19 policy is now that if you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney or Trusts then we will carry out a telephone or Zoom appointment. However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover (subject to Government advice). To see the areas we normally cover please click here. To arrange an appointment please telephone 01732 868190 or click here.

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