Inheritance tax (IHT) receipts (payments for IHT bills) reached unprecedented levels earlier this year, setting a new record for the highest ever monthly collection according to HMRC data.

The data showed that between April and June 2023, HMRC collected £2 billion in IHT payments, a £0.2 billion increase compared to the same period the previous year. However, it was the month of June that stole the spotlight, with HMRC collecting £795 million in inheritance tax, making it the highest monthly total ever recorded.

The surge in receipts is attributed to the rising prices of houses and other assets, pushing more individuals beyond the threshold for paying IHT.

HMRC collected £795 million in inheritance tax in June 2023, making it the highest month ever recorded

What is inheritance tax?

IHT is the tax that an estate pays after a person dies. An estate includes the person’s property, assets, and possessions. The amount of tax paid depends on the value of the estate, and it can be substantial. However, it’s important to note that IHT advice isn’t just for those with high-value estates.

Typically, IHT is charged at a rate of 40% on the value of your estate above a specific amount, known as the IHT threshold or nil-rate band (NRB). The NRB currently stands at £325,000. Moreover, if you’re married, there’s an added advantage – you can combine your IHT thresholds meaning that up to the first £650,000 of your combined estate can be exempt from IHT.

There’s also an additional allowance known as the IHT Residence Nil-Rate Band. It amounts to £175,000 and is over and above an individual’s own NRB of £325,000. However, it comes with a condition – the main residence must be passed down to direct descendants, such as children or grandchildren.

How can I mitigate my IHT liability?

With careful planning, IHT is can be mitigated within HMRC rules and guidelines. Tax planning can be quite overwhelming and time-consuming, especially when it comes to the area of inheritance tax, so it’s vital to seek the advice of an expert such as those at Amber River.

The approach our IFAs take involves understanding your personal goals and aspirations to recommend the most suitable strategies for you. They consider various options to mitigate your IHT, including wills, lasting powers of attorney, lifetime gifting, life cover, trusts, and lump-sum arrangements. Rest assured, the plan they design for you will be customised to align with your objectives, ensuring your wishes are met.

Get in touch

To speak to us about estate planning to help mitigate your beneficiaries’ IHT liability, or to arrange an appointment, call 0800 915 0000, or alternatively use our contact form here.