Recent figures released by HM Revenue & Customs paint a clear picture: inheritance tax (IHT) receipts are on the rise, and this trend is likely to continue. The amount collected from April 2024 to January 2025 has already surpassed the previous year, signalling a potential record-breaking year for IHT revenues. Ives & Co, leading solicitors serving Nottingham and Kent, can assist with wills and probate, and can help with Inheritance and Capital Gains Tax advice
This increase isn’t simply a matter of wealthier estates being targeted. The prolonged freeze on IHT thresholds, coupled with rising property values, is dragging more and more families into the IHT net. What was once considered a tax for the top 1% is now impacting a broader segment of the population.
The nil-rate band and residence nil-rate band, which determine the tax-free portion of an estate, have remained static. This means that as assets, particularly property, increase in value, more estates exceed these thresholds, leading to a 40% tax bill. Moreover, upcoming reforms to agricultural and business property relief are set to tighten the rules, potentially forcing difficult decisions for family farms and small businesses.
Experts suggest this trend is likely to continue, fuelled by the government’s need to bolster public finances. With pension pots set to be included in IHT calculations from 2027, the government’s IHT revenue is projected to grow further. There’s even speculation that the gifting regime, a common method for reducing IHT liability, could be overhauled.
This situation highlights the importance of proactive estate planning. Regularly reviewing your will and seeking professional legal advice is crucial to managing your wealth efficiently and avoiding unexpected financial burdens. For many, exploring options like whole of life insurance to cover potential IHT bills is becoming increasingly popular.
In essence, the landscape of inheritance tax is shifting. What was once a concern for a select few is now a reality for many. Understanding these changes and taking appropriate action is essential for protecting your assets and ensuring your beneficiaries receive what you intend.
