Inheritance Tax (IHT) receipts have fallen for the first time since 2009, according to data from HMRC. The amount of IHT collected in the 2019/20 tax year fell 4% (or £223m) to £5.2bn, with the introduction of the main residence nil rate band (RNRB) said to be the primary driver behind the fall.
The RNRB, introduced in 2017/18, is an additional allowance that is available if a person’s estate includes their home and is left to their direct descendants (children, stepchildren or grandchildren). The RNRB currently stands at £175,000 and, when added to the nil-rate threshold (£325,000), could give rise to an overall IHT allowance of £500,000, unless an estate exceeds £2m, at which point the RNRB starts to reduce.
If you’re married or in a civil partnership, any unused threshold can be added to your partner’s threshold when you die, giving a total IHT allowance of up to £1m. Beyond these thresholds, IHT is usually payable at 40%.
Could a review be on the way?
With the furlough scheme alone having already cost the government more than £39.3bn, Chancellor Rishi Sunak may decide to alter IHT rules in the coming months to help fill the hole in his budget. We’ll keep you updated with the latest news and work with you so that you can pass on assets in the most effective way.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.