Inheritance tax receipts double in less than decade
Inheritance tax bills have broken through the £5bn barrier mark for the first time, and have doubled since 2010/11, official figures reveal.
The government raked in £5.2bn in IHT receipts in 2017/18, an increase of 8% – or £388m compared to 2016/17. This is despite the residence nil-rate band being introduced in April 2017, allowing married couples and spouses to pass on an additional £100,000 allowance to direct descendants on top of the £650,000 IHT rate.
HM Revenue & Customs (HMRC) figures reveal IHT bills have been rising by an average of 10% year-on-year since 2009/10 and the total number of liable estates has also increased annually since then.
Male-owned estates make up around 47% of taxpaying estates by asset value, with the average estate coming in at £1.1m. The average tax liability stood at £182,000 in the 2015/16 tax year.
Women had a lower net value of assets at £942,000 with a tax bill of £176,000. They tend to have lower tax liabilities as males are more likely to die earlier, bequeathing estates to their spouse which are subject to tax relief.
Steve Webb, director of policy at Royal London, said: “The amount of money raised from inheritance tax has doubled in less than a decade, and a steadily rising proportion of estates are now caught within the inheritance tax net.
“Even the introduction of an additional nil rate band for families passing on a home to their children was not able to stem the growth in IHT revenues. Yet the tax remains complex and riddled with anomalies. It remains the case that IHT is a complex tax largely paid by those who do not have access to financial advice, and the sooner it is overhauled the better.”