Figures published by HMRC have revealed that Inheritance Tax (IHT) receipts reached a record £8.2 billion in the 2024/25 tax year as a result of rising asset values.
The latest figure is an increase on the previous year’s total of £7.5 billion and is more than double the figure of £3.8 billion recorded ten years ago.
Experts believe IHT receipts will only continue to rise due to the nil-rate band being frozen until at least 2030, and it not having been adjusted for inflation or rising property values. This means that more estates are becoming liable for IHT.
When a person dies, IHT becomes due on their estate. IHT can also fall due on some lifetime gifts, but most are ignored providing the donor survives for seven years after the gift.
The rate of tax on death is 40% and 20% on lifetime transfers where chargeable. Currently, the first £325,000 is chargeable to IHT at 0% and this is known as the nil-rate band.
Much estate planning involves making lifetime transfers to utilise exemptions and reliefs or to benefit from a lower rate of tax on lifetime transfers.
However, careful consideration needs to be given to other factors. For example, a lifetime gift may save IHT but may alternatively create a Capital Gains Tax (CGT) liability.
01/05/2025
View all >
Making Tax Digital warning
Sole traders and landlords with an income over £50,000 have been warned that there is less than a year before they will be required to use Making Tax Digital for Income Tax (MTD for IT).
READ MORE
IHT receipts reach record £8.2 billion
Chancellors plans for British Businesses
Chancellor Rachel Reeves has said British businesses will be supported in trading freely as she takes action on practices that undercut fair trade, such as the dumping of cheap goods into the UK.
Sign up to keep in touch to receive our latest news and industry updates.
* *
Yes, I would like to receive email updates providing me with the latest finance news, advice guides and details of future events.