According to HMRC data, Inheritance Tax (IHT) receipts have fallen for the first time in 11 years. The amount of IHT collected in the 2019/20 tax year decreased by £223m (4%) to £5.2bn. The primary driver behind the fall is likely to have been the introduction of the main residence nil-rate band (RNRB) in 2017/18.

The RNRB is an additional allowance available if a person’s estate includes their home and is left to their direct descendants, such as children, stepchildren or grandchildren, and currently stands at £175,000. When added to the nil-rate threshold (£325,000), this could give rise to an overall IHT allowance of £500,000, unless an estate exceeds £2m, at which point the RNRB starts to reduce.

If you’re married or in a civil partnership, any unused threshold can be added to your partner’s threshold when you die, giving a total IHT allowance of up to £1m. Beyond these thresholds, IHT is usually payable at 40%.

We will keep you posted with any updates and work with you so that you can pass on assets in the most effective way.