HMRC Inheritance Tax (IHT) receipts have risen to a record £5.4b with Londoners paying an average of 30% more than the rest of the UK.

Data from HMRC shows residents in the capital paid an average of £271,820 in inheritance tax on their estates in 2018/19 upon death, compared to just £209,502 across the rest of the UK.

IHT can be a costly obligation for families and recently, it was highlighted just how lucrative the tax is for the Government with receipts received during the 2020 to 2021 tax year totalling £5.4billion.

It is feared that more Londoners face getting caught up in the IHT net because of the financial implications of the Covid Pandemic.

Chancellor Rishi Sunak has already frozen the threshold when inheritance tax applies at £325,000 as he seeks to balance the nation’s books.

Should you pay inheritance tax?

IHT is a very emotive subject in the UK. Some people feel strongly that they should not have to pay anything and be allowed to pass 100% of their estate to their families.

Many other people argue that IHT is a much fairer tax than, say national insurance, as it taxes wealth, rather than income and is only paid by the wealthiest in society.

Regardless of your political views on the subject, it is important to understand that most of the money generated by IHT actually comes from people not being organised in their affairs, and that having something as simple as the correct Wills in place can reduce the amount your family pays when you die.

This doesn’t mean that you won’t pay any inheritance tax if your assets are over £325,000, it just means that you will only pay the basic amount required by HMRC.

There are lots of ways that couples and individuals can do this.

The important thing is to act early and make sure you get your affairs in order while you are still able to do so. 

Inheritance Tax facts

Who pays IHT?

Anyone with more than £325,000 in assets (£650,000 for most married couples). This means the combined value of:

•             Your home

•             Savings

•             Pensions

•             Cash

•             Jewellery & art

•             Investments

•             Overseas property

 How much IHT will I pay?

The Inland Revenue receives 40% of your estate over the Nil Rate Band unless you plan in advance.

What’s the average IHT bill?

According to the most recent data, Londoner’s pay an average of £271,820 in inheritance tax.

Across the UK the figure is £209,502.

How many people in the UK pay IHT?

Roughly four percent of deaths in the UK result in an inheritance tax bill, just over 24,000 families paid the tax in the 2017-2018 financial year, according to Money Week.

Are you worried about inheritance tax?

There are many ways in which both couples and individuals can minimise their inheritance tax liability.

We can help you plan to minimise, or sometimes even eradicate, any potential IHT liability.

This will allow you to pass as much of your estate as possible to whom you choose rather than the Inland Revenue.

For further information please contact us on 0800 29 88 66 1 or email info@hillmanlegal.co.uk.