Inheritance Tax Receipts

Inheritance Tax Receipts

Inheritance tax (IHT) receipts hit £1.4 billion in the first two months of the 2024/25 tax year: a 17% increase on the same period last year. This increase is the outcome of a mixture of increased asset values, high inflation rates and tax freezes.

Inheritance tax is charged at 40% above a certain threshold on the estate of a deceased person, which is currently set at £325,000. This is paid by 4% of UK estates, as most estates fall under the nil rate band (the threshold above which inheritance tax is payable). If a marriage or civil partnership is attached to the deceased, this means all assets left to a spouse are not subject to IHT, despite the deceased’s estate value.

The frozen nil rate bands, combined with rising asset values, are to blame for the trend of growing IHT receipts. Additionally, the frozen threshold partnered with increasing house prices has brought more estates into the tax band. As frozen thresholds and inheritance tax policy has failed to keep up with inflation, these figures are likely to continue an upward trajectory.

To summarise, IHT receipts are continuously increasing because of frozen nil rate bands and the increase in asset values. If you would like to speak to a member of our Wills and Inheritance tax team to find out how you can keep more of your estate for your beneficiaries, please call free on 0800 8840 640, or email PrivateClientNewEnquiries@everys.co.uk.