Increase in Inheritance Tax Receipts

The latest figures on tax receipts show that the 2012/2013 tax year saw an increase of 15% in the amount of Inheritance Tax collected by HMRC, compared with the previous tax year.

However, whilst the total Inheritance Tax paid rose from £2.65 billion to £3.05 billion in 2012-13, the overall proportion of estates that are liable for IHT has remained about the same.

Of all the estates above the £325,000 threshold (the amount which is free from Inheritance Tax) 42 per cent were from London and the south east, meaning those areas remain the hot spot for Inheritance Tax in the UK.

In the Summer Budget the chancellor announced that from April 2017 individuals will be entitled to a family home allowance in addition to the existing £325,000 inheritance tax allowance.

The family home allowance will be phased in and will be up to £1 million for a married couple or civil partnership by the 2020/2021 tax year.

But despite the reforms, it is still crucial to plan for Inheritance Tax in advance to avoid an unnecessarily large tax bill.