Inheritance Tax (IHT) is a tax on the estate of a deceased person in the UK. The current threshold for IHT is £325,000, and the tax is charged at a rate of 40% on the value of the estate above this threshold. However, there have been several recent trends in IHT that are worth noting. In this blog post, we'll take a closer look at these trends and what they mean for UK taxpayers.
Increasing Revenue from IHT
The latest trends show that the revenue generated from IHT has been increasing steadily in recent years. In the 2020-2021 fiscal year, the revenue from IHT was £5.3 billion, which is an increase of 3.9% from the previous year. This trend is expected to continue in the coming years as the UK government seeks to raise more revenue to fund public services.
Increased Use of IHT Planning Strategies
As the revenue from IHT has increased, more taxpayers have turned to IHT planning strategies to reduce their tax liabilities. These strategies include setting up trusts, gifting assets to family members, and using business relief. These strategies have become more popular in recent years, as more taxpayers are becoming aware of the potential tax savings they can achieve.
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Changes to IHT Rules
There have been several changes to the IHT rules in recent years that are worth noting. In 2020, the UK government introduced a new IHT exemption for families who pass on their home to their children or grandchildren. This exemption is worth up to £175,000 per person and is in addition to the existing IHT threshold.
In addition, there have been discussions about changing the IHT rules to make them simpler and easier to understand. The UK government has launched a consultation on this issue, and it remains to be seen what changes will be made in the coming years.
In Conclusion
The latest trends in IHT show that the revenue generated from this tax is increasing, and more taxpayers are turning to planning strategies to reduce their tax liabilities. The changes to the IHT rules, including the new exemption for passing on a home, have also had an impact on the tax. As always, it's important to stay up to date with the latest tax rules and regulations to ensure that you are paying the correct amount of tax.
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