Recent figures published by HMRC show that Inheritance Tax payments (IHT) in 2021 totalled £5.9bn. This is a record high for any calendar year. Receipts for April 2021 to December 2021 were £4.6bn. This is £0.6 billion higher than the same period in the previous year.
The reason for this increase is expected to be due to higher volumes of wealth transfers that took place during the pandemic. HMRC, however, state they cannot verify this until the full administrative data becomes available.
Other years where the receipts were high include 2017 and 2019. In these years, announcements, delays and cancellations of rises to probate fees in England and Wales affected this. This likely led executors to bring forward IHT payments to avoid prospective higher fees.
The CEO of Ampla Finance, Richard Kennedy, says that
“With IHT bills continuing to rise and, with IHT thresholds being frozen until 2026, individuals should be looking to review their wealth plans to ensure they are not left paying unnecessary high levels of tax in the years ahead.
The amount of IHT being paid continues to soar to record levels, even up a staggering 12% on the 2020 total.
Individuals need to ensure they are making use of tall tax efficiencies to reduce their IHT bill as much as possible.
For those unable to afford paying large IHT payments, there are options out there to help pay the levies. Those worried about facing a steep payment in future would be wise to seek advice now to ensure they are not left in difficulty when the payment deadline gets nearer”.
Inheritance Tax Rules
In England and Wales, if an Estate is worth more than £325,000 when a person dies, then they typically have to pay Inheritance Tax. Currently, the Inheritance Tax rate is 40% on anything above the threshold. If a person leaves more than 10% of the estate’s value to charity, then the rate may reduce to 36%.
The courts usually won’t issue the grant of representation until the executor has paid inheritance tax (IHT) to HMRC. This can potentially cause a delay in the administration of the estate.
You usually have to pay 10% of the tax due on the value of property and shares plus all of the tax due in respect of the rest of the estate. The executor should make this tax payment within six months of death. The additional tax is payable in yearly instalments over a ten-year period, or as soon as they are sold. Interest will start to accrue on any outstanding inheritance tax after six months from the date of death.
How We Can Help
Here at The Inheritance Experts, we work with solicitors who have years of experience dealing with inheritance matters. This includes Inheritance Tax payments. Contact us today by filling in our contact form. Or call us on 01614138763 to speak to one of our friendly experts.