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Reviewing Inheritance Tax

In the tax year ending April 2021, Inheritance Tax (IHT) liabilities amounting to some £5.76billion were raised in respect of 27,000 estates. Whilst that was a rise of some £0.8billion on the previous year, the number of deaths had also increased as a result of the pandemic.

The overall percentage of Estates which were liable to pay IHT (3.73%) was broadly in line with the previous three years. This, HMRC says, is likely to be as a result of the introduction of the Residence Nil-Rate Band in the tax year ending April 2018. The percentage is also lower than the all-time high of 5.96% seen in the tax year 2006-7.

Understanding how IHT is calculated can help individuals not only to better plan for the future but also to understand what options may be available in order to reduce future IHT liabilities. These might include using the annual gift allowances, tax-efficient investing, or setting up a Trust.

If you are looking for advice on inheritance tax planning, or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.

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