What steps are you taking to pay less inheritance tax?
According to new figures published by the Office for National Statistics, inheritance tax receipts for the year to February are expected to be £4.6bn.
This puts them on track to be around 20% higher than the previous year, when £3.8bn was raised in this tax for 2014/15.
Other projections released by the Office for Budget Responsibility show more than 40,000 estates had to pay inheritance tax in the past year.
This represents a four-fold rise from around 10,000 homes paying the death duty in 2010.
Under current rules, individuals benefit from a nil-rate band on inheritance tax of £325,000.
Taxable estates up to the value of this nil-rate band pay no inheritance tax and an inheritance tax rate of 40% applies on the value of estates above this level.
From next April, there will be an additional nil-rate band which is being introduced in stages, eventually allowing homeowners to leave an extra £175,000 free of inheritance tax.
It will mean that individuals can leave up to £500,000 free of inheritance tax and couples can combine their allowances to leave up to £1m to their beneficiaries.
A spokesperson for HM Treasury said:
“The government wants hard-working families to be able to pass on their home to their children or grandchildren.
“We recognise that more families are being pulled into the inheritance tax net than ever before, with the number set to double over the next five years.
“That’s why we’re reforming the rules to bring down the number of families paying inheritance tax.
“Under our new system hard-working families will have a new £175,000 inheritance tax allowance for their home on top of the existing £325,000 threshold – allowing them to pass £1 million onto their children completely free of inheritance tax.”
Despite these seemingly generous increases to inheritance tax allowances, the number of families paying inheritance tax in the future is still expected to continue rising.
According to the Office for Budget Responsibility, more estates will pay inheritance tax in the future as a result of rising house prices.
The latest house price index from Nationwide shows average year-on-year house price growth at 5.7%, pushing the value of the average home to more than £200,000.
Have you calculated yet how much your children would pay in inheritance tax when you die?
What steps are you taking to mitigate this tax, in light of a rising number of estates being subjected to inheritance tax?
