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HMRC raises record amount through inheritance tax in 2017/18

01/08/2018 News Team

Inheritance tax (IHT) figures released by HMRC show that the UK’s tax agency reaped in 2017/18 a record amount from the highest number of estates since data was first gathered.

IHT receipts totalled £5.2 billion in 2017/18, an increase of eight percent (£388 million) compared to 2016-17 and has been increasing since 2010-11. There was also a 22 percent increase in receipts from 2014-15 to 2015-16, which reflects an estimated 43,900 excess winter deaths in 2014-15.

At the same time, this year saw the highest number of estates claiming the four percent discount for charitable giving (2,020) saving a total of £350 million, a rise of over £50 million on the previous year, although still less than 10 percent of total paying estates.

The data also found that in 2015/16 (the most recent year studied), 4.2 percent of UK deaths were liable to IHT, a 0.3 percent increase on 2014/15. In 2015/16 there were 24,500 estates which paid IHT with an average IHT bill of £179,000.

Residential property accounted for 54 percent of the increase in capital value of estates, since 2009/10.

James Hender, head of private wealth at 2018 eprivateclient Top Accountancy Firm, Saffery Champness, said the statistics showed that “very clearly, the South of England continues to contribute the lion’s share of inheritance tax receipts, further reinforcing the economic contributions of, and concentration of wealth in, the region.”

Mr Hender added that recent analysis by the Office for Budget Responsibility suggested that inheritance tax receipts in the last year – 2017/18 - began with a “significant uptick”, which was according to the OBR, due to people looking to obtain probate (for which the payment of IHT a precondition) in advance of a proposed hefty rise in probate fees. 

“While the proposed probate fee increase never materialised,” Mr hender noted, “the ripple effect may still be seen in future IHT receipt announcements. Going forward, the plans for increased probate fees cannot be ruled out as all government departments are looking for new ways to raise funds.”

According to investor platform, Hargreaves Lansdown, increases in property values, stock markets and cash savings balances together with the freezing of the IHT allowance since April 2009 have combined to push IHT receipts higher.

Danny Cox, a chartered financial planner and head of communications at the firm, noted that “the Treasury continues to reap the dual benefits of rising property prices and frozen allowances with another year of record IHT receipts."

He added: "Much of the current IHT workings are complex and distort people’s behaviour and financial decisions - the system is crying out for simplification. It’s an uncomfortable subject, however get to grips with the basics, and you could save your beneficiaries a fortune in tax.”

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