One of the significant factors contributing to the rising IHT revenue is the government’s decision to freeze the inheritance tax thresholds until 2028. With property prices continuing to rise, more estates are surpassing the £325,000 threshold, making them liable for the 40% tax rate. Between April and December 2023, an estimated £5.7 billion was paid in inheritance tax, which is £0.4 billion more than the same period the previous year.

The residence nil-rate band, an additional allowance of up to £175,000, provides some relief when passing on the family home to direct descendants. Combined with the standard threshold, a couple can potentially pass on up to £1 million without incurring inheritance tax. However, this still leaves many estates, particularly in high-value property areas like London and the South East, subject to significant tax liabilities.

Contact us to learn more.