The landscape of inheritance tax (IHT) in the UK is evolving, with an increasing number of estates being drawn into the IHT net. The number of deaths resulting in an inheritance tax (IHT) charge in the 2021/22 tax year rose by 3 per cent to 27,800, according to HMRC figures. This is about 4.4 per cent of total UK deaths. IHT liabilities for the year increased by 4 per cent to almost GBP6 billion. The most important IHT relief was again the spousal exemption, saving GBP15.5 billion, followed by agricultural and business property relief of GBP4.4 billion and charitable relief of GBP2.1 billion.
IHT liabilities and taxpaying estates
A chart showing IHT liabilities created by taxpaying estates in the stated tax year.
This growth is largely attributed to the rising property prices and the unchanged IHT threshold, which has remained at £325,000 since 2009. As property values soar, especially in regions like London and the Southeast, more families find their estates exceeding the IHT threshold, resulting in a 40% tax on the value above this limit. This situation poses significant financial challenges for beneficiaries, who may need to sell inherited assets to meet the tax obligations.
However, there are strategies to mitigate IHT liabilities. One effective approach is the use of lifetime gifts, which can reduce the value of the estate subject to IHT if the donor survives for seven years after making the gift. Additionally, setting up a family investment company can be a tax-efficient way to manage and pass on wealth.
At Care Accountancy, we specialize in IHT planning and can help you navigate the complexities of estate management. Our team provides personalized advice to ensure your estate is structured efficiently, preserving more of your wealth for future generations. Contact us today to learn how we can assist you in safeguarding your legacy.
For more information, visit us at Care Accountancy.
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