Average inheritance tax (IHT) bills reached almost £200,000 in the last tax year, according to analysis of HM Revenue & Customs (HMRC) receipts by financial advice firm NFU Mutual.
Approximately 27,000 families were faced with IHT bills in 2018/19, resulting in a record £5.4bn in tax revenue during the period. However, five years ago, average bills were a comparatively low £141,000, with 2017/18 seeing a sharp increase. IHT bills have continued to surge, despite the introduction of the Residence Nil Rate Band, described as a “complex tax break on family homes” by NFU Mutual.
Furthermore, the statistics published by HMRC also revealed around 5,000 individuals paid IHT last year while still alive. This is largely due to older relatives gifting money and assets to younger family members via certain types of trust, triggering an IHT bill.
Commenting, NFU Mutual chartered financial planner Sean McCann said: “This is a deeply unpopular and fiendishly complicated tax. Successive governments have heaped on further layers of complexity that have made passing family wealth through generations more difficult.
“The Office of Tax Simplification’s review of IHT cannot conclude soon enough. Thousands of families could be missing out because of the unnecessarily complex IHT rules.”
In 2015/16, the average IHT bill soared to £160,000, rising by almost £20,000 when compared to the previous year. In 2016/17, the average bill increased by just £450 to £160,800. Despite this, it rocketed to over £200,000 in 2017/18 before falling to just below £200,000 in 2018/19.
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