According to the latest figures, more inheritance tax (IHT) was paid in July than any other month since records began.
The increase in inheritance tax receipts comes after a spike in coronavirus-related deaths and months of probate delays.
In this blog, our experts have put together the key information you need to know about inheritance tax
Inheritance Tax receipts rise to a record number
HM Revenue & Customs (HMRC) has revealed that a record £571 million in IHT was raised in July 2021, representing the single largest month ever recorded.
Receipts for April to July 2021, meanwhile, totalled £2.1 billion, up £0.5 billion (or around 33 per cent) compared to the same period last year.
Speaking about the figures, HMRC said: “Higher receipts in March to July 2021 are expected to be 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.”
Why are Inheritance Tax receipts rising?
HMRC has attributed the increase in IHT receipts to “higher volumes of wealth transfers” (deaths) that took place during the Covid-19 pandemic.
However, experts argue that the IHT threshold has failed to keep up with inflation and rising property values. If inflation had been considered since April 2009, the individual threshold would now stand at £446,000.
When is Inheritance Tax paid?
IHT is charged at 40 per cent on the value of the estate that exceeds the IHT threshold – currently £325,000 for individuals or £650,000 if combined with a spouse or civil partner.
If you give away your primary residence to children (including adopted, foster or stepchildren) or grandchildren the threshold increases to £500,000 or £1 million when combined with a partner.
The tax must be paid no later than six months from the end of the month in which the deceased died.
How can I pass down more of my wealth?
Families who fear they may have to pay significant amounts of IHT should start planning for later life now. This might include giving gifts, leaving money to a charity, maximising your allowances, or creating a trust, among other options.
To learn more about our Inheritance tax services and how best to leave your estate to loved ones, dependants and worthy causes, contact a member of our specialist Wills and Probate team. Either ring us directly on 0115 824 1700 or fill out an online contact form today.