Published on: 13th September 2016

UK families pay out record levels in Inheritance Tax

Numbers revealed by HMRC today show that they collected a huge record of £4.7 billion in Inheritance Tax (IHT) payments during 2015/16 - a dramatic 22% increase on last year's figures. The country's IHT bill is the biggest since the introduction of the current taxation system 30 years ago.

The massive rise in payments has been blamed on increasing property values which have pushed the value of "ordinary family's" estates above the current IHT threshold, standing at £325,000 for a person and £650,000 for a couple.

The thresholds have remained the same since 2009, even though there have been consistent increases in property values, especially in London and the South East. This has resolved in an increasing number of middle class families being "dragged" over the threshold and becoming subject to 40% tax. The figures reinforce this trend, with families in the region responsible for generating almost half of HMRC's IHT revenues.

In 2017, changes to the IHT legislation are due, and will theoretically increase the nil-rate band (the value of an estate that isn't subject to IHT) to £1m for couples who own a property. But critics of the new rules argue that they are too complicated and will cause much more confusion for both families and advisers.

We are regularly helping families deal with estate administration with most of them telling us that handing over the tax work to a specialist to deal with is a great relief. For more information on how we can help you, get in touch for free, no-obligation advice.

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