Time to revisit your IHT strategy?

Inheritance Tax (IHT) receipts from April 2021 to March 2022 totalled over ￡6bn, a 14% (￡0.7bn) increase on the same period 12 months earlier*.

IHT receipts have increased for a variety of reasons, including the impact of rising property prices, meaning more families falling within the range of IHT. While thresholds remain frozen at current levels – the nil-rate band is ￡325,000 and the main residence nil-rate band is ￡175,000 – IHT can effectively be regarded as a stealth tax.

Your IHT refresh:

Strategies to reduce the amount of IHT payable include:

• Gifts – use your ￡3,000 annual allowance before the end of each tax year. You can also make gifts of up to ￡250 per person per tax year, rules apply
• Leave money to charity – if you leave at least 10% of your net estate to charity, the IHT rate reduces from 40% to 36%
• Make a Will – and keep it up to date by choosing who you pass your estate on to
• Trusts – for example putting money into a trust to pay for a grandchild’s education or to support another relative
• Take out life assurance – this won’t reduce your estate but instead provides a lump sum to your beneficiaries to pay the IHT bill. The policy should be written under a suitable trust
• Take advice – sensible IHT planning can help to reduce the amount of IHT your beneficiaries pay and safeguard your wealth for the future.

*HMRC, 2022