HMRC Takes in Record £5bn in Inheritance Tax
A little over £5 billion was gathered by HMRC as inheritance tax during the most recent tax year, which represents a record high figure, according to the Office for National Statistics (ONS).
Inheritance tax takings were worth £4.7 billion in the year to May 2016 but the comparative figure for 2016/17 was up to £5.1 billion.
Among the reasons given to explain the increase in inheritance tax amounts taken last year is that average property prices have been rising around the UK, particularly in southern England.
The freezing of the threshold for inheritance tax liability at £350,000 for the past several years is also cited as a key factor.
Any property assets worth in excess of £325,000 are subject to inheritance tax as they are passed on to inheritors, with that figure having remained unchanged since 2010.
Property values have risen consistently over the course of the past seven years and the result has been a sharp rise in the number of people who find themselves facing inheritance tax bills from HMRC.
Indeed, estimates from the Office for Budget Responsibility suggest that the number of family estates affected by inheritance tax increased almost fourfold between 2010 and 2017.
Stamp duty is also understood to be a pertinent issue in this context, with the relatively large sums currently being taken as duty during the process of a property purchase apparently deterring many retirees from downsizing to smaller and less valuable dwellings later in life.
“If elderly people don’t downsize they may pay more inheritance tax as more of their money will be tied up in their property, leaving them with less to give away,” David Hollingworth from the mortgage firm London & Country told the Telegraph.
“There are various reasons why people are not downsizing, a big one is the huge cost of moving, including stamp duty and also the lack of suitable housing for retired people.”
Existing rules mean that estates worth £350,000 or less can be passed to inheritors without taxation, with any value above that figure being taxed at a rate of 40 per cent.
However, the government is phasing in rules which will allow homeowners to bequeath up to an extra £175,000 in property wealth tax free by 2021.