Tax planning in demand as IHT receipts to soar

Tax planning in demand as IHT receipts to soar

Inheritance tax receipts will reach £6.2bn in 2022, despite Philip Hammond’s pledge not to introduce a “death tax”.

Figures released with the Budget today showed the amount of money HM Treasury collects with IHT will continue to rise over the next five years.

In 2016/17 the government will collect £4.7bn in IHT, but by 2021/22 this will rise by £1.5bn.

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Les Cameron, head of technical at Prudential, said: “Inheritance tax planning will continue to be a booming area of financial advice.

“News that IHT receipts will hit £6.2bn in 2021 will only increase consumers’ demand for inheritance tax planning. 

“We should also remember the £3,000 gifting allowance has been frozen for over three decades so the earlier you start using it the more wealth you can pass on to your family.”

According to HM Revenue & Customs, IHT receipts have increased year-on-year since 2009/10, on average by 12 per cent each year, primarily because of rising asset values.

The Office for Budget Responsibility has forecast the number of deaths subject to inheritance tax will more than double in the period between 2013 to 2014 and 2018 to 2019, reaching 54,500 – or 10 per cent of deaths.

In the run-up to the Budget today there had been speculation that Mr Hammond would revive plans for a 10 per cent inheritance tax surcharge to pay for social care, put forward by Labour in 2007 and criticised by the Conservative Party as a “death tax”.

In the end Mr Hammond announced that the government would publish plans for the future funding of social care later this year.

But he added the options being considered “do not include, and never have included a death tax”.