Figures released by HMRC earlier this year have shown that they have received more than £3.4 billion thus far from inheritance tax and death duties between 2013 and 2014 — a 6-year high which is gradually creeping towards pre-recession figures.
Previous figures show £3.1 billion was acquired by the HMRC, meaning there has been an increase in IHT of 8.6%, a significant increase from the 7.9% rise during the two years prior.
The Office for Budget Responsibility had predicted the figure would reach £3.5 billion. Despite the reality being just shy of this, the amount may suggest that more of the UK’s beneficiaries have been caught in the IHT “tax net” over the past year. The OBR have also stated the number of UK estates liable for inheritance tax is sure to double by 2020.
Though the IHT threshold amount was frozen in 2009, HMRC claim the rise is due to increased house prices. A similar statement was in fact made by a representative of the NFU Mutual back in 2008, when the HMRC claimed a record amount of £3.8 billion that year.
Interestingly, during 2009-10, the inheritance tax claim fell dramatically to £2.4 billion, after the Labour Party allowed people to transfer their IHT allowance to their spouse, after they are deceased.
In preparation for the general election next year, the Conservatives have promised to increase the IHT allowances. Research from the Institute of Fiscal Studies suggests if this isn’t increased, inheritance tax receipts will reach a 45 year high.
In addition to this, the latest HMRC figures show the proportion of IHT being applied to estates worth less than £1 million continues to depreciate, and now stands at 31% of the total IHT figure — a major drop from the 51% back in 2006-07. When you consider that the total value of residential property assets notified for probate is actually on the increase, this may prove the HMRC property price increase claim to be a significant factor in the overall figures.
