New data has revealed a sudden surge in Inheritance Tax (IHT) receipts this year, despite the introduction of new rules allowing those who pass property down to direct descendants to tap into an additional tax-free allowance.
According to the Office for National Statistics (ONS), IHT receipts increased by as much as 22.9 per cent in the first quarter (Q1) of 2017 – while more recent data suggests that the Treasury has brought in almost £2bn in IHT since March.
In the UK, IHT is levied at a rate of 40 per cent on individual estates valued at £325,000 or more. Anything below £325,000 is tax-free.
In April this year, the Government introduced what is known as the new Residence Nil Rate Band (RNRB) – which enables those who leave residential property to direct descendants such as children and grandchildren to tap into an additional tax-free allowance of £100,000 in property value.
However, despite the introduction of the RNRB, data reveals that IHT receipts have actually soared by as much as £285m compared with this time last year.
Some commentators have suggested that this may be linked to increasing property values, which are pushing more estates over the threshold.
Others, however, have suggested that HM Revenue & Customs (HMRC) has been taking a more ‘aggressive’ approach to collecting the tax in recent months – accusations which the tax authority has denied.
An HMRC spokesperson said: “There has been no change of approach by HMRC.
“Inheritance Tax receipts fluctuate from month to month for many reasons, including changes to asset values, variations in estate sizes and the number of deaths in a given period.”
The increase in IHT receipts highlights the importance of seeking specialist advice in terms of effective IHT planning.