Inheritance Tax receipts increase by £0.2 billion for the tax year 2020 to 2021
HMRC confirmed Inheritance Tax receipts for the year 2020/21 are £5.3 billion, which is £0.2 billion higher than the same period a year earlier.
What does this show?
HMRC asserts that higher receipts in October 2020, November 2020 and March 2021 are due to higher volumes of wealth transfers that took place during the COVID-19 pandemic, though HMRC cannot verify this until full administrative data becomes available. It seems logical however that this would be the case, particularly for those victims of COVID-19 who had not had the opportunity/time to embark upon effective IHT planning during their lifetime.
It is also probably fair to say that a combination of increasing property prices and a stagnation of the Nil Rate Band (NRB) for individuals has meant that more estates than ever before are attracting a charge to IHT.
The NRB is the threshold above which an individual’s estate is liable to IHT. It applies to all UK domiciled individuals and it has been set at £325,000 since 6 April 2009. The Government has recently announced that the NRB will be frozen until at least April 2026.
What does this mean for individuals?
It is important to get professional advice in relation to your estate planning so as to mitigate your exposure to IHT on death. The timing of the advice obtained can be crucial to effective wealth planning and as such it is vital that individuals seek advice on a regular basis. It is recommended that individuals look to review their will and tax planning structures at least every three years or at such time as there is a material change in their personal or financial circumstances, if sooner.
For estate planning or inheritance tax advice, please do not hesitate to contact our inheritance tax solicitors.