The complete sum HM Revenue & Customs collects in inheritance tax (IHT) has greater than doubled over the previous decade from £3.8bn in 2014/15 to £8.25bn in the previous tax yr.
HMRC figures launched earlier in the present day additionally present that the variety of deaths which set off an IHT invoice has risen by 13% over the previous yr to 4.62%.
Pension and investments supplier AJ Bell says continued freeze on the nil-rate bands means an increasing number of households are being caught by the tax.
Everyone can move on as much as £325,000 earlier than any IHT is due, though this IHT nil charge band has been frozen since 2009.
The residence nil charge band (RNRB) has been obtainable since 2017 and provides a enhance of as much as £175,000 per individual if a property is left to their direct descendants.
A mixture of those bands means most {couples} can move on as much as £1m on second loss of life.
But had each bands been uprated with inflation reasonably than being frozen in 2020, a couple might presently move on an property price £1,448,000 mixed, in accordance with AJ Bell.
AJ Bell senior pensions and financial savings skilled Charlene Young says: “Despite the introduction of a new reduction – the Residence Nil Rate Band (RNRB) phased in from 2017 – authorities is accumulating extra in loss of life taxes than ever earlier than and the tax take has greater than doubled in a decade.
“The proportion of estates paying IHT is now again on the similar stage seen earlier than the introduction of the RNRB, however reasonably than offset that by including a new exemption or rising the prevailing ones, the chancellor is ready to slash exemptions as an alternative.”
Rachel Reeves’ first funds in October 2024 tore into the exemptions loved by household companies, farms and pensions, she says.
Starting from April 2026, wealth that has been utterly sheltered from IHT will begin to be included in individuals’s estates for IHT.
Young provides: “In a double whammy for a lot of estates – the Chancellor additionally continued the large freeze on each the nil charge band and residence nil charge band till a minimum of 2030.
“Whilst IHT reforms would possibly shatter the plans of households seeking to move on future wealth, the impact of what is going to be a twenty-year freeze on each key allowances for households is already displaying its tooth, with extra estates than ever paying IHT.
“In 2022-23 the quantity jumped to 31,500, a rise of 13% for the yr.”
