Figures from HMRC show that inheritance tax (IHT) receipts have reached their highest level since the current system was introduced in March 1986. The 2015/16 total peaked at £4.7bn, an increase of 22% compared to 2014-15, which is almost double the normal annual growth pattern.
The report state that IHT takings have increased year-on-year since 2009-10, on average by 12% each year, primarily as a result of rising asset values. Each year, residential property makes up approximately a third of the total value of taxpaying estates; the ongoing rise in property prices has, certainly, contributed to a rise in overall tax take.
The rise in IHT receipts is not as a result of rising house prices alone. HMRC says the increased rate of year-on-year annual growth has also been affected by the higher number of deaths in the months leading up to 2015-16 in comparison to previous years.
The latest figures show there were 232,162 deaths in the period December 2014 to March 2015, an increase of 17% from the 197,706 deaths in the period December 2013 to March 2014. The data for the year 2015/-16 is not yet available due to the time period required to settle an estate.
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. Typically female-owned estates tend to have higher tax liabilities due to the fact that males are more likely to predecease a spouse, and therefore are able to claim spouse relief.
The report from HMRC also provides a breakdown of the total value of tax due and the number of estates liable to tax by geographical region over the period of 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 mean average IHT due per taxpayer was £223,000 in London and £176,000 in the South East, compared to £147,000 in Wales and £142, 000 in the North West.