Treasury pockets additional £700million from Inheritance Tax - Palmers Solicitors

Treasury pockets additional £700million from Inheritance Tax

Treasury pockets additional £700million from Inheritance Tax

Inheritance Tax receipts increased by more than £700 million in the last six months compared to the same period last year, according to newly released figures.

The report, published by HM Revenue & Customs (HMRC), reflects the greater number of “wealth transfers” that took place during the coronavirus pandemic, as well as a sustained focus on enforcement activity.

According to the research, the tax authority collected a total of £3.1 billion in Inheritance Tax between April and September 2021 – around 29 per cent more compared to last year’s figures.

Whilst the increase has in large been attributed to rising deaths, the report also reveals sustained enforcement activity. In the 2020/21 tax year, HMRC launched 3,574 Inheritance Tax investigations resulting in an additional £254 million in tax revenue.

With an increasing number of families under the scope of HMRC enforcement activity, paying too little Inheritance Tax – or indeed too much – is often a concern.

Inheritance Tax is charged at 40 per cent on the value of your estate that exceeds the Inheritance Tax threshold – currently £325,000, or £650,000 when combined with a spouse or civil partner.

If you are passing down property, you may also benefit from the residence nil-rate band. This increases your tax-free threshold by £175,000, but only if you leave your principal home to children (including adopted, foster or stepchildren) or grandchildren.

Any unused nil-rate band can be transferred to a surviving spouse or civil partner, increasing the maximum available threshold to £1 million.

Laura Stock, a Senior Associate with Palmers Solicitors, who specialises in estate planning, said: “The latest figures from the treasury underline the importance of seeking good estate planning advice.

“Regardless of gender or age, putting your financial affairs in order before you die is not something that should be left to chance or put off until another day.

“In fact, the earlier you start, the more opportunities you will have to structure your affairs in the most constructive way.

“The steps you take need to reflect your needs and goals, which will be significantly influenced by your personal circumstances and age.

“At Palmers Solicitors, we have extensive expertise in estate planning issues, including making a Will, inheritance tax planning and addressing long-term care issues.”

For help and advice with related matters, please get in touch with our later life and estate planning team.