Inheritance Tax Update

 

It was announced last month that HMRC received £5.36 billion from inheritance tax in 2021/22, an increase of £700m from the year before.  As with everything, this figure has been affected by the pandemic but rising property prices is likely to have had an impact too.

As no changes were announced in the 2022 Spring Statement to inheritance tax legislation, it is expected more estates will become liable and this amount of revenue will simply go on increasing.

The situation continues to be:

Nil Rate Band –         the amount a person can usually leave before inheritance tax is payable	£325,000
Residence Nil Rate Band –         an additional allowance available in certain circumstances, typically when the family home is left to children	£175,000
Rate of inheritance tax	40%

and it is still possible to claim:

• an exemption from inheritance tax, if the estate passes to a spouse / civil partner or to charities
• relief from inheritance tax of either 100% or 50% on certain agricultural and / or business interests
• any unused Nil Rate Band and Residence Nil Rate Band from a predeceasing spouse / civil partner

In January 2022 HMRC amended their reporting regulations. Before then, an inheritance tax return was required with all probate applications, even if no inheritance tax was payable. In certain circumstances, non-tax paying estates no longer need to submit a return however the information still needs to be declared and so it is not clear if this will save much time, but it should at least save some paper!

 

Should you need assistance with inheritance tax planning or the administration of an estate or the making of a Will or Lasting Powers of Attorney please contact…..