Inheritance tax revenues ‘will continue to rise’ – how to reduce costs and litigation | Personal Finances | Finance

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Why are IHT revenues increasing?

The IHT is an unpopular tax among the population, with many calling it a “death tax”. This resentment has likely intensified in recent months as it appeared the government was raising more from IHT.

While population growth and increased life expectancy are partly responsible for this, Dawson explained that the government itself holds the greatest responsibility for the rising bills.

“There are a number of factors affecting the increase in IHT, some of which are a natural consequence of population growth after the ‘baby booms’ in the 1940s and 1960s, the increase in life expectancy. and the propensity of this aging population to maintain a higher level. wealth until they pass, ”he said.

“Unfortunately, however, it is exactly this demographic that has been hit the hardest by Covid which has led to a higher death rate in the previous period. The economic influences come from a general increase in inflation. house prices which increased by more than 8.9% between April 2020 and April 2021 and the share price recovered to a level previously observed before the pandemic.

“Ultimately, however, the main driver was political, with the zero rate range (NRB) and zero residential rate range (RNRB) frozen until 2026.

“What this actually means given the economic trends illustrated above is that IHT revenues will continue to increase gradually until at least 2026 without an explicit increase in the tax rate. Indeed, more and more areas are of increasing value and as such exceed the now capped relief provided by the NRB (£ 325,000) and RNRB (£ 175,000), with frequency and scale increasing. “


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