personal finance

Inheritance Tax receipts rise to £5.4 billion: 3 simple steps to take for ‘peace of mind’


Inheritance Tax (IHT) receipts received by HMRC during 2018 to 2019 were £5.4 billion, statistics released by HMRC last week show. There was a three per cent increase (£166 million) in Inherit once Tax receipts received by HMRC between 2017 to 2018. HMRC said receipts have been rising since 2009-10. The total number of UK deaths that resulted in an IHT charge has also risen in recent years – increasing every year since 2009-10.

In 2016-17, there were 28,100 such deaths.

This was an increase of 3,600 (15 per cent) since 2015-16.

Commenting on the latest figures, Stuart Simpson, Head of Equiniti’s bereavement services division – Equiniti Benefactor, urged people to be aware of any fees they may face.

He said: “Bereavement can be devastating, and dealing with unexpected costs and taxes can add further stress in what is already a difficult time for loved ones.

“While the proportion of UK deaths that will incur Inheritance Tax remains small, it is important that these people are aware of any fees they will incur to make the process of handling the estate as pain-free as possible.”

Mr Simpson also suggested three steps a person could take in order to have “peace of mind” when it comes to an estate.

“Seeking professional advice, drawing up a legal will and discussing these matters within the family unit are all simple steps that people can take to give peace of mind,” he said.

Dan Garrett, Farewill co-founder and CEO, also touched on the importance of these conversations.

He said: “Dealing with the death of a loved one is incredibly difficult.

“Add the pending rise of probate fees to the equation and it becomes clear that the delay is causing prolonged pain for friends and family held in a Brexit balance that should not affect vulnerable families.

“Dying is the only event in our lifetime to incur the most significant financial consequence, with £1 trillion expected to pass between generations over the next decade.

“And yet, for 30 million Brits, it is pushed aside as a conversation for a later date.

“It is becoming increasingly important to assess how to gain transparency and clarity over the cost and processes involved in the passing of loved ones.

“Today, Brits are paying a startling record of £5.4 billion in inheritance tax, and an increasing number of us are being directly affected by the charges.”

Inheritance Tax may be required to be paid on an estate (money, possessions and property) of a deceased person, if its value exceeds the threshold.

Usually, this threshold is £325,000.

If a person leaves everything above the threshold to their spouse, civil partner, a charity, or a community amateur sports club, then there is normally no Inheritance Tax to pay, the Gov.uk website states.

However, the government website points out that if the estate’s value is below the threshold, it will still need to be reported to HMRC.

It may be possible to increase the threshold.

For instance, giving one’s home (or their share in the home) to their children or grandchildren can increase the threshold to £475,000 – provided the estate is worth less than £2 million.

If a person is married or in a civil partnership and their estate is worth less than the threshold, and unused threshold can be added to their partner’s threshold when one dies.

Their threshold can therefore reach up to £950,000.

The standard Inheritance Tax rate is 40 per cent, and is charged only on the part of the estate which exceeds the threshold.

READ MORE: Is Inheritance Tax on a sliding scale? How rates are applied above threshold and on gifts



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.