Families paid a record £5.4bn in tax revenue in the 2018-19 financial year, with the average inheritance tax (IHT) bill reaching almost £200,000, according to data published on May 15.
Analysis of HMRC receipts by NFU Mutual found 27,000 families were hit with IHT bills in 2018/19, with the total bill increasing £200m on the previous tax year and £600m on the financial year ended April 2017.
NFU Mutual’s analysis also found that 5,000 individuals paid IHT last year while they were still alive as a result of gifts to certain types of trust that can trigger a bill.
A review of IHT is currently underway as the Treasury is keen to simplify its rules.
The IHT review was commissioned by Chancellor Phillip Hammond last year after he said in January he was concerned the system was "particularly complex".
Alan Chan, director at IFS Wealth & Pensions, said: "It’s quite surprising really when you think about it especially where large amounts of money is involved and less than half of those people are actually aware of the inheritance tax rules and exemptions.
"The most common mistake I tend to come across is where individuals gift an asset whilst retaining benefit of it and do not realise that the gift is ineffective for IHT purposes because it’s not a true gift.
"Inheritance tax can be mitigated with the right planning so it’s important to get proper financial advice as it may well prevent costly mistakes from being made."
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