Today the Chancellor announced more welcomed changes to Stamp Duty payments to help more people move, promote residential investment, and boost first-time buyer ownership. The best news is these changes...
The Cost of Inheritance Tax – £3 billion and counting
Ashley Wallace-Cook – Private Client Solicitor
Inheritance Tax (IHT) acts as a tax on death, imposing a charge on the value of a deceased person’s estate, on transfers made during the deceased’s lifetime and on certain other types of property of which the deceased has not completely divested himself or herself.
Analysis by Prudential, the international financial services provider, of HM Revenue and Customs’ latest IHT statistics has revealed that in the tax year for 2012-13, payments of IHT rose by on average £5,000 when compared to the previous tax year.
IHT was paid on 17,900 deceased person’s estates, gaining the Exchequer the staggering sum of £3.05 billion which is a 15% increase on the £2.65 billion collected in 2011-12.
The analysis also reveals, somewhat more positively, no evidence that an increasing proportion of deceased person’s estates are becoming liable for IHT. IHT was paid by approximately 6% of all estates, a reduction from the figure of over 9% in the tax year 2007-08.
There are significant fluctuations in IHT paid across the United Kingdom, for example the average IHT bill grew by over 25% in Northern Ireland between 2010 and 2013, and 10% in the North East of England, but average bills fell in Scotland and Wales by 9% and 5% respectively. London and the South East of England remain, unsurprisingly, IHT hotspots.
Prudential’s advice is simple: as the amount of IHT paid increases, so does the need for careful and efficient tax planning in order to permit as much accumulated wealth to flow to families and beneficiaries of an estate and to minimise the impact of IHT.
Planning should be undertaken early and, given the stream of new rules and options, should be kept under review. An example of the changing IHT landscape is the phasing in of the Residence Nil Rate Band, whereby individuals will be entitled to a family home allowance in addition to the existing IHT allowance, which is currently set at £325,000.
For legal advice on Inheritance Tax or any other private client matter please email firstname.lastname@example.org or call 01452 411601.
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