At St Helens Law, we’ve seen first-hand how the recent surge in Inheritance Tax (IHT) can impact families across the UK.
HMRC reported £4.6 billion in IHT receipts in just the first seven months of the 2023/24 fiscal year. That’s an increase of 12% from the previous year. This highlights the need for families to be prepared when it comes to estate planning and Inheritance Tax.
Why has Inheritance Tax increased?
It was expected that the Chancellor would use the recent budget to make a cut to Inheritance Tax, but it is now understood that any changes will be delayed until the spring.
However, whilst there has been no cut to Inheritance Tax, there hasn’t been an increase in rates, either. So why the increase in IHT receipts this year?
There are actually several reasons for this:
- IHT thresholds are still frozen until April 2028 at the earliest. Because the thresholds haven’t risen in line with inflation and increasing property values, more estates are now exceeding the threshold. This makes more people liable to pay IHT than in recent years.
- There has been a general increase in wealth (although many will be surprised to hear this!). In particular, older generations have benefited from rising asset values across investments, savings, and property. This has caused more estates to rise above the IHT threshold.
- The ageing population of the UK means that there are inevitably more deaths each year. This naturally leads to more estates being assessed (and ultimately liable) for IHT.
- Many individuals are completely unaware of how to plan effectively for what happens to their estate in the event of their death. This lack of planning can result in much higher IHT liabilities.
Despite the significant role of IHT, there is a noticeable lack of understanding among the public, particularly among those over 55.
A study by Just Group found that 59% of retirees are unaware of the IHT threshold, and 50% have limited knowledge of the rules. This gap in understanding underscores the need for clear guidance and legal assistance when it comes to estate planning and Inheritance Tax.
How We Can Help
Our team of wills and probate experts can provide tailored advice to help you navigate these legal challenges, ensuring your estate is managed efficiently and in line with your wishes.
Whether you’re seeking clarity on the current IHT rules, exploring investment options for tax relief, or updating your estate plan to reflect the latest tax landscape, we’re here to assist you every step of the way.
Contact us to discuss how we can help you manage your estate effectively and mitigate the impact of Inheritance Tax.
For advice and information on the topics mentioned in this blog discuss this with an accountant or IFA. If you require one, we would be happy to refer. We do not provide financial advice, only legal advice.