IHT Collected By HMRC Breaks £5 Billion Barrier - Data

Harry Keir Hughes 22 June 2017

IHT Collected By HMRC Breaks £5 Billion Barrier - Data

Inheritance tax is one the biggest issues in the UK politically, with many citizens up in arms about the amount they have to pay in taxes to receive their rightful inheritance.

A record £5.1 billion ($6.5 billion) of inheritance tax was collected this year in the UK, up by 9 per cent from last year when £4.7 billion was collected, new data from a law firm shows.

These figures, tallied by Wilsons, a private client law firm, suggest the reason for the rise is the growing value of residential property, along with a frozen IHT threshold of £325,000 which is hitting more and more estates.

At 40 per cent, IHT is one of the UK’s more punitive taxes, and advice by Wilsons underlines the need for tax-efficient transfer of wealth to children, with the process of transfer starting as early as possible to ensure dependents aren’t left with soaring IHT bills.

The law firm also advises making gifts from surplus income. Post-tax income can be IHT-free provided the money is gifted to help children buy properties. Pensions are another IHT-free vehicle, as are wills, when structured in the right way.  

“A substantial amount of wealth is now being taken by the government through IHT,” said Tim Fullerlove, partner at Wilsons. “What upsets people is that this is wealth that is being taxed twice. It is important that people start planning as early as possible how they mean to pass their wealth on to their children or grandchildren. If they do not do this, families could be met with large IHT bills.”

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