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Inheritance tax receipts reach record high

1 August 2017

The latest figures published by HMRC show inheritance tax (IHT) generated £4.84bn of income for the treasury in 2016/17, an increase of nearly 4% from the previous year. IHT is paid on death, on taxable lifetime transfers and ten yearly charges on discretionary trusts. IHT on death, which accounted for 96% of the IHT receipts, is charged at a rate of 40% on assets over the nil rate band allowance (NRB) of £325,000, subject to any other reliefs and exemptions that may apply.

The NRB has been frozen at £325,000 since 2009, resulting in more people being caught by IHT as a result of inflation and increases in asset prices, particularly in the property market.

We can work with clients to help reduce their IHT bill by careful estate planning during their lifetimes, including:

  • making lifetime gifts
  • setting up trusts
  • utilising the new IHT allowance for residential property
  • maximising the use of reliefs from IHT (e.g. for agricultural and business property) and/or
  • giving 10% of their estate to charity to reduce the IHT rate charge from 40% to 36%.

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