Reducing IHT receipts – first decline in 11 years
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.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
Other Insights of interest
9th April, 2021
A new wave of investors spring to life
Savers disappointed by record-low interest rates are looking for new ways to make their money… Read full insight
6th April, 2021
Economic Review of March 2021
BoE: Outlook ‘unusually uncertain’ The Bank of England (BoE) has expressed growing confidence that a… Read full insight
29th March, 2021
Residential Property Review – March 2021
Stamp Duty holiday extension In his Budget on 3 March, Chancellor Rishi Sunak confirmed an… Read full insight
29th March, 2021
Property Market Review – March 2021
Transaction volumes ‘muted’ Savills recently released UK Commercial ‘Market in Minutes’ report, highlighted that transaction… Read full insight