As HMRC records record Inheritance Tax (IHT) receipts, how important is lifetime tax planning?

Associate Solicitor Louise Nelson, of Thames Valley law firm Blandy & Blandy’s Wills, Probate, Tax & Trusts, highlights Inheritance Tax (IHT) figures from HM Revenue & Customs (HMRC) for the past year and provides a reminder to individuals and families of the importance of lifetime tax planning.

HMRC recently released figures showing it collected a record £5.5billion in inheritance tax revenue between April 2021 and February 2022, an increase of £0.7billion on to the previous year.

The previous record of £5.36 billion was set in 2019.

While house prices and the value of other assets continue to rise, the zero rate band (the value above which the IHT becomes payable) has remained unchanged at £325,000 since 2009, and the will remain until at least 2026.

Despite the introduction of the zero residency band from April 2017, which is available for certain estates under certain conditions, more estates are brought within the scope of inheritance tax.

Individuals and their families may also be affected by capital gains tax (CGT), a tax you pay on profits made when selling (or “disposing of”) something (an “asset ”) which has increased in value during your ownership, such as a second property.

The Office for Budget Responsibility (OBR) has suggested that £125bn will be raised from IHT and CGT revenue over the next five years.

There are a number of non-taxable deductions that may be available for an estate, allowing you to pass on a larger share of your estate to your loved ones upon your death.

If the value of an estate exceeds the corresponding allowances, the IHT is payable on the balance of the estate at the rate of 40%.

There is no tax, regardless of the value of the estate, on property going to a widow or widower or to a charity.

The value of this exempt property is deducted from the value of the entire estate before the tax calculation is made.

This way, gifts to husbands, wives and charities can get an estate out of the tax bracket.

Blandy & Blandy, which has offices in Reading’s Blagrave Street, says its specialist wills, estates, tax and trusts team can provide advice on wills and estate planning, including in relation to trusts and tax planning. for life.

He also published two blog posts that some people will find useful.

They are titled When I die, will inheritance tax have to be paid on my estate?, and What is inheritance tax (IHT) for?

For more information log on to:, email: [email protected] or call 0118 951 6800.

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