Inheritance Tax (IHT) used to be something that only the super wealthy had to worry about, right? Well, recent data from HMRC suggests that not only is that wrong, but it’s getting worse.

In 2021/22, HMRC’s tax receipts from IHT rose to just over £6 billion, up from around £5.3 billion the previous year. While the introduction of the Main Residence Nil Rate band in 2017/18 seemed to have stemmed the tide a bit, after IHT receipts more than doubled from £2.4 billion in 2009/10 to £5.2 billion in 2017/18, last year’s increase was the second highest year-on-year increase in the past 20 years.

Property prices have continued to rise, and this will undoubtedly have contributed to the increase in IHT bills. With the Chancellor announcing a freeze on IHT tax-free bands until at least 2026, it’s hard to see anything other than further increases in HMRC’s take from IHT in the years ahead.

Of course, there’s an old adage that says IHT is one of the few taxes you’ve got any choice to pay or not. With some careful, albeit fairly long-term, planning, it is possible to significantly reduce the IHT liability which will be borne by your estate. Starting these conversations earlier increases the chances of success, for those who are minded to try and avoid this particular tax so please come and speak to our Wealth team if you want to start the conversation now.

Disclaimer: Johnston Carmichael Wealth Limited is authorised and regulated by the Financial Conduct Authority.

This communication is intended to provide a general review of certain topics and its purpose is to inform but not to recommend or support any specific investment or course of action.

This communication is based on our understanding of tax legislation as at 20 June 2022. The value or benefit of any specific tax reliefs or allowances will depend upon your own situation.

The financial conduct authority does not regulate tax and estate planning.