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Aug 17, 2021

Inheritance tax receipts bounce back

Inheritance tax (IHT) receipts brought in £5.4 billion in the 2020/21 tax year, marginally less than the total for 2018/19, according to official statistics.

IHT receipts were up from 2019/20 by 4%, and just £33 million less than the highest amount ever brought in during 2018/19.

Around 33,000 people are expected to have taken a hit from IHT in 2020/21, according to predictions from the Office for Budget Responsibility, up by almost a third the previous year.

The tragic rise in deaths related to COVID-19, the booming house market and a five-year freeze of tax protections announced in Spring Budget 2021 are responsible for the increase in IHT receipts.

Despite that increase, HMRC described the trend of the tax as "broadly flat across the four years since the tax year 2017/18", following a steady climb since 2009.

This can be partially explained by the residence nil-rate band introduced in the 2017/18 tax year, which sheltered £3.6bn from IHT charges in the 2018/19 tax year.

IHT receipts are expected to hit an all-time high of £6bn at the end of this tax year and £6.6bn by 2025/26.

Talk to us about inheritance tax planning.