HMRC figures show inheritance tax (IHT) receipts have hit their highest level since the current system was introduced in March 1986, totalling some £4.7bn in 2015-16, an increase of 22% compared to 2014-15, and almost double the normal annual growth pattern
The tax authority says IHT receipts have increased year-on-year since 2009-10, on average by 12% each year, primarily because of rising asset values. Each year, residential property makes up approximately a third of the total value of taxpaying estates and the ongoing rise in property prices has contributed to a rise in overall tax take.
The current hike in IHT receipts is not, however, down to rising house prices alone. HMRC says the increased rate of year on year annual growth will also have been affected by a higher number of deaths in the months leading up to 2015-16 compared to previous years.
According to the latest figures, there were 232,162 deaths in the period December 2014 to March 2015, as opposed to 197,706 deaths in the period December 2013 to March 2014. This was an increase of 17%.
Detailed analysis of the 2015-16 will not be available until next year, because of the time lag in settling estates. However, HMRC’s analysis of IHT payments in 2013-14 shows that the average male-owned estate liable to IHT had a net value of £1,027,000 and had a tax liability of £168,000. The average female-owned estate liable to IHT had a net value of £929,000 and had a tax liability of £191,000. In general, female owned estates tend to have higher tax liabilities than males because males are more likely to predecease a spouse and therefore claim spouse relief.
HMRC has also provided a breakdown of the total value of tax due and the number of estates liable to tax by geographical region over the period 2009-10 to 2013-14. This shows the highest number of estates liable to tax and the highest levels of IHT liabilities are for estates in the south east and London followed by the south west and the east of England.
In 2013-14, the average (mean) IHT due per taxpayer was £223,000 in London and £176,000 in the South East of England as compared to £147,000 in Wales and £142,000 in the north west of England. This is, at least in part, because of the higher house prices found in the first two regions.
