The OBR’s latest forecasts suggest IHT will raise £7.2 billion this Financial Year – which looks likely to be an under-estimation – and as much as £8.4 billion in 2027/28.
Research from Just Group released this week shows the low level of understanding among retirees about the current thresholds and the Inheritance Tax rules, even though increasing numbers of estates are expected to fall prey to the tax in the coming years.
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “We are now halfway through the Financial Year and already Inheritance Tax looks set to deliver another record haul for the Treasury, with the current tax take far higher than at the same point last year, and looking likely to exceed the OBR's full-year estimates.
“Inheritance Tax may turn out to be the government’s magic porridge pot, as the freeze on thresholds until 2028 combined with the 30% increase in property prices over the past six years push increasing numbers of estates into paying the tax.
“Our research finds that a worrying number of retired people don’t have a firm grasp of the Inheritance Tax rules which could leave many families with a nasty surprise. The majority (59%) of retirees over 55 said they don’t know what the threshold is for the value of an estate to pay Inheritance Tax and a further 50% of this age group don’t have a clear understanding of the rules.
“What seems to be an ever-increasing value of IHT receipts should act as a warning for people to remember to assess the entire value of their estate and for homeowners this must include an up-to-date valuation of their property. Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill.”
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